Schools: Teacher Training

Baroness Perry of Southwark: asked Her Majesty's Government:
	What action they will take to increase the number of applicants for teacher training to meet future demand.

Lord Adonis: My Lords, the number of teacher training places being filled is sharply up since 1997, thanks to a 16 per cent real-terms increase in teachers' pay and generous new recruitment incentives, including PGCE training bursaries of up to £9,000, golden hellos in key subjects of up to £5,000 and training salaries of about £15,000 for mid-career entrants into the teaching profession, who now contribute one in seven of new secondary school trainee teachers.

Baroness Perry of Southwark: My Lords, I thank the noble Lord for that reply. However, if he made the comparison not with 1997 but with last year, would he not feel some concern that there is a drop-off, particularly in the key subjects of mathematics, ICT and modern languages? Does he accept that possibly some of his Government's policies—surrounding teachers with bureaucracy, testing and naming and shaming—have made teaching a less attractive career for young people today?

Lord Adonis: My Lords, the decline since last year is small, and the number of places being filled has reduced partly because of demographic changes in the pupil cohort. However, I certainly do not accept any of the rest of what the noble Baroness said. Let us take mathematics. In 1997, the then Government filled 1,460 places for trainees in mathematics; last year, the figure was 2,000. That is thanks to all the changes that we have brought about, including significantly increased recruitment incentives and much higher pay, which is up by nearly one-fifth in real terms. As for what she said about burdens on teachers, real-terms education spending has nearly doubled under this Government since 1997. A significant proportion of that has gone into paying teachers better and ensuring that we have 40,000 more teachers. I do not think that the comparison with 1997 does any credit at all to the Conservative Party.

Lord Dearing: My Lords, the Office for National Statistics has forecast an increase of 500,000 in the number of children of primary school age by 2015, pointing to the need for an extra 3,000 teachers in primary schools a year. Do the Government feel that they can respond to that?

Lord Adonis: My Lords, we believe that it will be possible to respond to that. The recruitment for primary school teacher training places has risen from 11,790 in 1997 to 18,320 last year, which is an increase of 55 per cent. As the noble Lord rightly says, with the changes in the pupil cohort we will need more in due course. However, on the basis of our success in recruiting in recent years, I believe that we will be able to meet the additional numbers.

Baroness Walmsley: My Lords, is the Minister aware of today's Ofsted report about science teachers, which says that they lack confidence and teach too much to the test? Does he therefore consider that, particularly in primary schools, specialists are needed—not only maths specialists, on which the Government have made an announcement today after their own report, but also specialists in science and reading—to assist the generalist teachers so that they have the confidence to teach the subject well, not simply by using pre-prepared packages?

Lord Adonis: My Lords, the appointment of more specialist subject teachers in primary schools is a big issue that we will need to address over the coming years. As the noble Baroness rightly said, we have taken a significant step forward today by announcing that every primary school will either have, or have access to, a lead specialist in mathematics so that we can raise standards in that subject. We need to look at the implications for other subjects over time. That will not necessarily be by recruiting more dedicated specialist teachers, because of course most primary school teachers do a BEd and so have a more generalist training; it may well be by providing more incentives for professional development in particular disciplines so that we have a more specialist capacity in primary schools.

Lord Stoddart of Swindon: My Lords, is the noble Lord aware that there is a great deal of concern about the low numbers of male teachers in primary and secondary schools? What are the percentages of male teachers in both kinds of schools and what are the Government doing to increase their number?

Lord Adonis: My Lords, I do not have those statistics readily to hand. As the noble Lord says, there are not enough male teachers, in primary schools in particular. When we last debated the issue in the House, the noble Baroness, Lady Bottomley, urged on me the virtues of all-male shortlists for primary school teachers. I did not think that we could accede to that, but we have recruitment campaigns targeted at getting more men to come forward for teacher training places, which seem to be yielding some dividends.

The Lord Bishop of Exeter: My Lords, given the contribution of schools of a religious character to the maintained system, it is important that there should be a good supply of teachers, whatever their faith position, if any, who understand such schools and what shapes their ethos, as well as the nature of faith and the contribution that it makes to personal development. Given reports of increasing difficulty in recruiting teachers with a suitable background, particularly at senior management level, is the Minister satisfied that there is adequate provision in our HE institutions to train and support such teachers? If not, will he indicate what the Government intend to do about the issue?

Lord Adonis: My Lords, we need more RE teachers, which is why religious education is one of the priority subjects in recruitment. As such, trainees in RE qualify for the £9,000 higher-level bursary and for a £2,500 golden hello. We are putting significant resources behind the recruitment of more RE teachers. Although, as the right reverend Prelate says, we need more, the numbers have gone up. The number recruited into secondary training places increased from 640 in 1997 to 790 last year. The trend is in the right direction, but we fully accept that we need to do more to encourage good candidates to come forward.

Lord Sutherland of Houndwood: My Lords, what steps are being taken to analyse and monitor teacher retention among those increasing numbers who are coming into the profession to ensure that they remain there?

Lord Adonis: My Lords, this is one of the prime responsibilities of the Training and Development Agency for Schools, which works closely with higher education institutions and schools to ensure that we do all that we can to support teachers better, particularly in their induction year. We have new support for trainees in the induction year before they reach qualified teacher status precisely to ensure, as the noble Lord says, that we have a lower wastage rate than in the past.

Baroness Carnegy of Lour: My Lords, what makes the noble Lord think that able and committed people will come into and stay in teaching when the Government make a huge point of the fact that so many schools are failing and that, when they fail, they are either taken over by another school or closed? How does that encourage able people?

Lord Adonis: My Lords, the noble Baroness is referring to the National Challenge strategy that we launched last week in respect of 638 schools that are below the threshold of 30 per cent or more of pupils achieving five or more good GCSEs, including English and maths. That figure of 638 compares with the figure of 1,610 in 1997, so there has been a huge reduction in the past 10 years. Our message to the schools is that, with the benefit of the £400 million investment that we are making to support schools at the lower-attaining end of the spectrum, we believe that it is possible to eradicate that figure of 638 once and for all. That will make the education system much more attractive to potential teachers, as well as to parents and pupils.

Food: World Supplies

Lord Alton of Liverpool: asked Her Majesty's Government:
	What assessment they have made of the scale and gravity of any future shortage of world food supplies; and what steps they are taking to ensure a concerted international response.

Lord Tunnicliffe: My Lords, our assessment is that there is no global food shortage. This is backed up by the World Bank and other international and UK think tank analysis. Recent price rises have significantly increased the cost of food, hurting the poorest most in urban and rural areas. The Government are taking the lead in pressing for co-ordinated international action to address immediate food security needs, improve policies, bring a rapid conclusion of the Doha trade round and boost agricultural productivity in developing countries.

Lord Alton of Liverpool: My Lords, how does the Minister square that statement that there is no world food crisis with the statement of the World Food Programme that there is a silent tsunami which will plunge more than 100 million people into hunger and leave instability and riots in its wake? At the G8 summit in Japan next month, will the Government, in their attempts to co-ordinate an international response to this crisis, not look again at issues such as the reassessment of subsidies for biofuels, the distortion of trade policies, the bolstering of food production and emergency assistance to help the poorest farmers through this immediate crisis?

Lord Tunnicliffe: My Lords, the Government entirely accept that there are serious problems of supply, particularly in developing countries. They believe that they are making their biggest impact by encouraging the UN-World Bank taskforce, which is developing a comprehensive framework for action, in setting out how donors, agencies, developing countries' governments and NGOs can work together to respond. Elements that they will consider include increasing humanitarian assistance, boosting small-farm production, reducing trade restrictions and export bans, addressing macroeconomic imbalances, improving monitoring and social protection, improving international markets, and developing a consensus on the use of biofuels.

Baroness Rawlings: My Lords, with riots in many parts of the world by starving people protesting about food prices, what are Her Majesty's Government doing to encourage the Chinese and Indian Governments, with their large economic projects in Africa and Burma, to develop the local agriculture that would help alleviate the starvation of many of these communities?

Lord Tunnicliffe: My Lords, I can only repeat that we are trying to work through the United Nations, the World Bank and the IMF to produce a co-ordinated impact. The way forward on hunger and poverty throughout the world is very complex. Crucially, it is about improving local capability and infrastructure, and creating free markets, so that the world supply can be properly balanced.

Baroness Northover: My Lords, what efforts will be made to ensure that women and girls are particularly protected, given that they are especially vulnerable at times of crisis? Does the Minister agree that this is a crisis in which the EU, standing united, has a huge capacity to help?

Lord Tunnicliffe: My Lords, the programmes do not particularly target women and children, but among DfID's general policies there is a specific gender policy that recognises the tremendous contribution that women make in developing societies. EU member states are working together, particularly through the United Nations in the programme with the World Bank. They have done a lot of work; they had a successful meeting in Rome and there is consensus among donor countries that the way forward is in the right direction.

Lord Maxton: My Lords, does my noble friend agree that one of the ways of increasing the supply of food in the future is to lift the restrictions that we and our European partners have imposed on the development of genetically modified crops, and actively to encourage a massive increase in investment in this science?

Lord Tunnicliffe: My Lords, I shall not be tempted too far into that minefield. We recognise that genetically modified technology could contribute to world hunger, but that will not solve the problem on its own. Technologies, including genetic modification, have risks. DfID is working with Defra and the international community to ensure that developing countries can make informed decisions on whether to develop or import genetically modified organisms.
	A key area of the DfID programmes is £1 billion over the next five years going into research in general, £400 million of which will go into agricultural research. I am sure that parts of that research will contribute particularly in understanding the risks and benefits in this area.

Lord Hannay of Chiswick: My Lords, does the Minister agree that the current situation, which looks as if it will continue for some time, provides a golden opportunity to get rid of subsidies and import and export barriers, thus enabling world markets to provide a market response to the increase in demand?

Lord Tunnicliffe: My Lords, briefly, no and yes. Certainly the price stimulus is helping to focus attention on barriers. The CAP modifications that will come about if the Doha round is successfully concluded will reduce barriers. It is strongly the view of Her Majesty's Government that that will contribute. In fact, food prices are starting to moderate. The Food and Agriculture Organisation expects next year to have a 3.8 per cent increase in cereal output. This news, together with some major removal of various protectionist decisions, has led to wheat being about $280 a tonne, down from $430 in March. Rice, which was $1,200 in May, is now less than $800, and the only crop that is staying stable is maize, at about $200 a tonne.

Immigration: Detention Centres

Baroness Miller of Chilthorne Domer: asked Her Majesty's Government:
	What other options they considered before deciding to commission a new detention centre for illegal immigrants.

Lord West of Spithead: My Lords, we always consider all options for enforcing the rules and removing illegal immigrants, from detention at one end of the spectrum to measures to promote compliance for low-risk people at the other. We remain convinced that it is necessary to detain people as a last resort to enforce returns. The additional detention capacity announced last month will enable us to remove more immigration offenders, including foreign national prisoners.

Baroness Miller of Chilthorne Domer: My Lords, why has the Minister not answered my Question for Written Answer, tabled on 5 March, concerning the Chinese community of illegal immigrants? Perhaps that is because at the current rate of repatriation, despite a secret MoU signed with the Chinese Government, it will take some 400 years at 100 people a year being repatriated, as some 40,000 are estimated to be here. Does he think that he can build his way out of this situation? Who is the winner? Certainly not the UK taxpayers; not the immigrants who are left in limbo; and not the UK Chinese restaurants that have been raided and left with enormous fines. Are there any winners?

Lord West of Spithead: My Lords, first, I apologise to the noble Baroness for failing to reply to her Written Question. It is going through the process and I shall be responding soon. We have a good tale to tell. We are firm but fair, and the number of people applying to get into the country is reduced to a quarter. We returned 63,000 people last year, 4,200 of whom came out of our prisons, including 20 killers, 200 sex offenders and 1,100 drug offenders. All were returned. This is a very good story and I am proud of it. Notwithstanding what some people might say, this is still a splendid country and masses of people want to get here, so we must have firm rules for returning people.

The Earl of Sandwich: My Lords, will the Minister say how the Government are going to recoup the £30 million lost at Bicester and what improvements have been made to Harmondsworth since that severe report from the Chief Inspector of Prisons two years ago?

Lord West of Spithead: My Lords, the noble Earl raises a good point about Bicester. We have learnt a lot of lessons there. It was going to be built as an accommodation centre—the situation was different at that time. There were, understandably, a lot of local objections. There were issues over planning, and then the number of people trying to get into the country reduced dramatically, as I have mentioned. Yes, it was a badly run project; we have accepted that and we have accepted the PAC's report. We have learnt a great deal, and the new buildings that we are constructing have benefited from that.

Lord Avebury: My Lords, does the Minister agree that it costs some £1,230 a week to keep somebody in detention; and does he agree that there should be a more rigorous examination of the decisions taken to detain, so that we do not give expensive board and lodging to people, two out of five of whom will not be deported but allowed to remain in the country? Does the Minister also agree that more effort should be made to reduce the numbers who are compulsorily sent back by increasing our liaison with the International Organization for Migration, which at present returns 250 to 300 people a month to their countries of origin voluntarily, and which says that the number could be increased?

Lord West of Spithead: My Lords, detention is used only when we believe that it is absolutely necessary and it is for the shortest possible time. The average detention time for an illegal immigrant is 28 days. For a family it is normally less than 72 hours, because clearly we want to look at those cases carefully. For prisoners it is longer, because it is difficult to get them back to countries. Sometimes it takes up to six months, but we keep them for as short a time as possible. We review these things. Each person has a case officer. We work on a careful case-by-case basis. I am very proud of the efforts that we put in to make sure that people are handled in a firm but fair way.

Lord Hylton: My Lords, given the current emphasis on deportation, is there not a danger that asylum applicants will be lumped together with overstayers, with illegal entrants and with former convicted criminals? Thus the innocent are likely to be treated as if they were guilty. Will this not harm our reputation overseas?

Lord West of Spithead: My Lords, the noble Lord raises a good point, and one that I talked with my briefers about this morning. The situation is that the worst prisoners are kept in prison until they go, because they are seen as a great risk. The incident at Campsfield House at the weekend was remarkably well handled. A couple of people suffered from smoke inhalation and there was some damage to the education centre. However, apart from that, little damage was done. As a result, we are reviewing whether we should be harder on some other prisoners, some of them drug abusers. I agree that we have to be careful not to indirectly harm normal asylum seekers. We are trying to achieve this; I think that generally we do. We put those who are at the greatest risk in areas where they are not going to interact with normal asylum seekers.

Baroness Warsi: My Lords, is it not correct that the whole policy is back to front? If the Government got their house in order and dealt with border controls and decided what it was that Britain needed and imposed quotas based on those needs, we would not have to behave in this inhumane way in dealing with detention and every other aspect of removal. Do we not need to get our policy right and clear in relation to people coming into this country, rather than constantly focusing on trying to get them out?

Lord West of Spithead: My Lords, I am afraid that I disagree with the noble Baroness: we are not inhumane at all. I cannot accept that. However, she is right about us tightening the borders. Having come into this recently, I say that, over a number of years, a number of political parties have not addressed this. The party that I belong to is now addressing this very closely. We are reinforcing the controls and, in conjunction, we are looking after our borders. As I say, this is a wonderful country, and there are millions of people who would like to come here—so, my goodness, we have to make sure those borders are secure.

Zimbabwe

Baroness D'Souza: asked Her Majesty's Government:
	What discussions they held with the United Nations Secretary-General about Zimbabwe, other than the humanitarian issues already debated in the United Nations Security Council.

Lord Malloch-Brown: My Lords, in recent days both the Prime Minister and the Foreign Secretary have spoken to the UN Secretary-General about Zimbabwe. In addition to discussing the humanitarian situation, they spoke of the need to deploy international observers in sufficient numbers to deter continuing state-sponsored violence and intimidation ahead of the 27 June election, the current visit of the UN envoy to Zimbabwe, and other support the UN could provide at this critical time.

Baroness D'Souza: My Lords, I thank the Minister for his Answer. I take this opportunity to thank him for his obvious concern for Zimbabwe and, indeed, for his regular briefings. Mugabe has said that he would rather go to war than allow Morgan Tsvangirai to take office, so the future is likely to get even uglier. Does the Minister agree that now is the time for the UN to call some kind of summit of the leaders of neighbouring countries and donor nations, and possibly also of Commonwealth countries, to pre-empt a civil war in that country?

Lord Malloch-Brown: My Lords, the noble Baroness is quite correct to say that the situation in the coming weeks looks appalling. We still hope that democracy will prevail on 27 June and that the likely very large lead that the Opposition enjoy in the polls will be enough to overcome whatever intimidation and violence is put their way. However, the noble Baroness is correct: we cannot count on that. We are therefore pressing heavily for not just the UN but the AU and SADC to be active. Just yesterday, the AU, which has often been criticised in this House for not being sufficiently forthcoming on Zimbabwe, put out a statement calling for free and fair elections and announced that it was sending 70 observers. Therefore, by the end of this week, we expect there to be 350 international observers in the country, with more arriving next week.

Lord Howell of Guildford: My Lords, the hope for democracy on 27 June is of course very slim, with Mugabe, his team and his military men arresting and beating up opposition leaders. However, can the Minister expand on the very interesting and constructive idea put forward by the noble Baroness, Lady D'Souza? Has not the time come for more vigorous action and perhaps a resolution at the UN? Is there not also a need to work with the Commonwealth, as she suggested, with SADC leaders, and with the chairman of SADC, the President of Zambia, in organising a really forceful message to the Zimbabwean people and the Zimbabwean junta, which seems to be running the election, that their time has come? Is there not currently a need for more vigour in this whole operation? I should like to hear more from the Minister on that approach.

Lord Malloch-Brown: My Lords, first, as we speak, a UN envoy, who was accepted by the Government after some delay, is in the country. He will return to New York and we are pressing for him to give a Security Council briefing in public so that his views of the situation will be disseminated as widely as possible. Secondly, as I pointed out, the AU is sending in a delegation and has backed it with a strong statement. It will be led by a former president, whose party stepped down in Sierra Leone after it lost an election, and therefore he knows, and can convey the reality of, that situation. Equally, we should understand that, even now, there are only just sufficient votes in the UN Security Council to ensure a debate on the issue. Several powerful countries are still resisting action in the council. We must press for it through all available means but not assume that we yet have a united international community on this point.

Lord Taylor of Blackburn: My Lords, does my noble friend agree that you can build all kinds of resolutions in the United Nations and the Commonwealth but that the country that will have the greatest effect is South Africa? We should talk sincerely and firmly to South Africa and ask the South Africans whether they realise what harm they are doing to themselves and their colleagues by not bringing pressure to bear in the way that they should.

Lord Malloch-Brown: My Lords, my noble friend is right: South Africa has a pivotal influence on the situation, but I regret that it is one of the countries in the Security Council that is still resisting action. However, on the other side, South African public opinion has been inflamed by reports of the violence coming out of Zimbabwe and the country has faced its own difficulties in relation to Zimbabwean immigrants. Increasingly, we are seeing politicians and civil society take the lead in South Africa in an attempt to block arms shipments, to protest against what is happening and possibly to send trade union and civil society observers directly to oversee the elections. Therefore, I think that the people of South Africa are on the right side.

Lord Avebury: My Lords, was it decided in the Security Council last Thursday that only humanitarian and not political issues should be discussed? How does the Security Council manage to disentangle humanitarian from political issues when there are massive internal displacements, armed action by ZANU-PF thugs and prevention of the feeding of starving people, including 170,000 orphans, who have been deprived of UNICEF aid? How can you disentangle political from humanitarian issues?

Lord Malloch-Brown: My Lords, the noble Lord is quite right; it beats me. I do not know how you can disentangle the two. I think that it is holding on to a fig leaf to prevent a full discussion of the horrific situation in Zimbabwe in front of the council that calls a spade a spade and says that there is a political breakdown in the country. We will continue in the forum allowed to us in the council and elsewhere to insist that where the presidential candidate of the Opposition has already been arrested four times since his return, where his number two remains in jail on treason charges since his return, where almost 60 people have died, tens of thousands have been displaced and several thousand injured and temporarily imprisoned, the conditions are not in place for free and fair elections. President Mugabe needs to understand that elections held on those terms will not be recognised anywhere around the world, least of all in Zimbabwe, as free, fair and legitimate.

St Austell Market Bill

Read a third time, and passed.

Pensions Bill

Lord McKenzie of Luton: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.
	House in Committee accordingly.
	[The CHAIRMAN OF COMMITTEES in the Chair.]

Lord Skelmersdale: moved Amendment No. 1:
	Before Clause 1, insert the following new Clause—
	"General objective of this Part
	The general objective of Part 1 of this Act is the wider availability of pensions savings opportunities and their take up by making provision for new or better ways of providing such, whilst providing for the proper and efficient administration thereof."

Lord Skelmersdale: Amendment No. 1 stands in my name and that of my noble friend Lady Noakes. It is some time since the House has been asked to consider a Bill as complicated as this. I expect that the Minister has spent as many hours as have my noble friend and I getting to grips with exactly what it means and understanding what it says. By the size of the file in front of him, I feel confident in making that comment; I must say that my file is modest in comparison with his. Partly because of discussions in another place and partly because of their own volition, we already have a raft of government amendments even before your Lordships have had the opportunity to discuss the details of the Bill. It almost goes without saying that we would not have the first 86 clauses—that is, Part 1 of this Bill—if the Government had not decided that this was the year to enact the proposals of the Pension Commission of the noble Lord, Lord Turner, and we would not have had the Bill at all if the arrangements for stakeholder pensions had included an employer contribution and/or automatic enrolment by law. However, we are where we are and we on this side of the Chamber will make the best fist of it that it is possible to make. I therefore start with this amendment.
	I said at Second Reading that the Bill has been so drafted that the rationale for it—namely, that the Government, in the shape of the Personal Accounts Delivery Authority, may set up a pensions scheme with all the attributes outlined in the first 57 clauses—does not become clear until Clause 58, which is nearly halfway through the Bill. I noticed the Minister glaring at me and I have taken note of what the Minister said to me at Second Reading. He said that the Bill had been drafted in this way because:
	"The absolute cornerstone of the Bill is auto-enrolment, not only for personal tax, but for a whole range of provision". [Official Report, 3/6/08; col. 121.]
	None the less, I question whether we would have Part 1 at all if we were not to have personal accounts. We will not attempt to completely redraft the Bill—that is way beyond the competence of the opposition party, even with the pensions experience, both in and out of government, of many of my noble friends. We have chosen to ask the Committee to agree that we should have a statement at the beginning of the Bill that encompasses what it is all about. In recent years this has almost invariably been stated in the Long Title. This Bill, however, has both the snappiest and the vaguest Long Title that I can recall of any Bill I can recall for years.
	The Long Title, as your Lordships will see, merely says:
	"A Bill to make provision and for connecting purposes".
	This is true as far as it goes, but can hardly be described as explicit. Noble Lords may remember an old song which contains the line:
	"What's it all about, Alfie?".
	Despite the blandishments of the noble Baroness, Lady Hollis—who I am glad to see is in her place—during the passage of a previous Bill when I quoted from another song, I shall not sing it, either now or in private. Since there is nothing in the Long Title that gets to grips with the purposes of the Bill, a general statement of what it does is necessary. This amendment covers only the rationale of Part 1; that is, the first 86 clauses. The Committee may feel that purpose clauses should cover the whole of a Bill, but this is not so. The 2008 edition of the renowned Bennion on Statutory Interpretation tells us that a purpose clause is,
	"An express statement of the legislative intention".
	It goes on to say:
	"It may apply to the whole or part of an Act".
	I am strongly suggesting that this new clause, Amendment No. 1, be included at the beginning of the Bill. The wording is:
	"The general objective of Part 1 of this Act is the wider availability of pensions saving opportunities and their take up by making provision for new or better ways of providing such, whilst proving for the efficient administration thereof".
	We have chosen these words carefully to cover, not only what is currently in Part 1 of the Bill, but what we would expect to see before it completes its passage and arrives on the statute book. The basic premise is that Part 1 of this Bill follows as closely as possible the scheme set out in the second report of the Pensions Commission, which believed, as I do, that it is necessary to:
	"Overcome the barriers of inertia and high cost, which deter voluntary private pension provision."
	That is exactly what this Bill will do. There are, however, concerns, of which the Minister is no doubt well aware. If not, he very soon will be. These include: the possibility that firms will close their existing workplace pension schemes in favour of the new scheme, which will be very much cheaper to administer; the auto-enrolment process; advice to workers on savings, including pension saving, but not exclusively that; regulatory burdens and excessive administrative costs on businesses, especially small and medium sized enterprises; and ensuring the low cost of operation.
	I invite the Committee to consider the inadequacy of the Long Title and the need therefore for a purpose clause covering Part 1 at the beginning of the Bill. I beg to move.

Lord Oakeshott of Seagrove Bay: We on these Benches support the amendment, and if the noble Lord chooses to press it to a Division we will support him. There is a fair element of motherhood and apple pie in it, but we Liberal Democrats are always in favour of that. I am not sure which of the team on the Official Opposition Front Bench represents the motherhood tendency and which the apple-pie tendency, but we are with them on this.
	As this is the first amendment, I want to say a word following the noble Lord, Lord Skelmersdale, having pointed out how extremely complicated the Bill is. The more I looked through the amendments last night and thought about what we would say today, the more I thought that the Floor of the House was not the right place to hold this Committee stage. We on these Benches do not see why one party with 201 Peers out of 733—28 per cent—seems to have a complete veto on where Committee takes place. That same party has under 40 per cent of the non-government Peers. Operationally and practically, we would make better progress, have an interactive discussion with the Minister's officials—they would be better able to deal with points as they arose—and make better law quicker if Committee on the Bill, like that for some of its predecessors, had been held in Grand Committee. Report gives plenty of opportunities to challenge and, if necessary, pass amendments on the Floor of the House.
	Having said that, we take no exception. We broadly support the new clause, and will support it in a vote if necessary.

Lord Lyell: At the outset, I apologise to the Committee for not being available to be here on Second Reading. In spite of what the noble Lord, Lord Oakeshott, said, perhaps we should look at the newspapers. One leading newspaper has a wonderful headline saying, today of all days: "If the old refuse to die, let them work longer". I do not know whether that referred to our deliberations on the Bill, but one aspect of the article came to mind. Doubtless my noble friends will be able to cover it in considerable detail, and I suspect that even the Minister may be able to use his accountancy qualifications and experience on it. The article states that:
	"In the UK, longevity is not only increasing; the increase is accelerating".
	Experts in the field that we are discussing have predicted that 50 per cent of those of today's population who are 30 years of age will live to 100 years of age. We can do some simple actuarial calculations; I am sure that that will be meat and drink to my noble friend Lady Noakes and the Minister. The statistic gives some idea of the importance of the Bill, even though we take into consideration the wise words of my noble friend Lord Skelmersdale on the Front Bench. A massive task is in front of us, but we have to set about it. I am interested in and supportive of what my noble friend proposes in his amendment.

Lord McKenzie of Luton: I welcome the opportunity for a brief Second Reading debate about the principles of the Bill, and welcome the general thrust of the amendment. However, I fear that it sets out only a partial story about the general objectives of our reform. For that reason I hope that the noble Lord, Lord Skelmersdale, will not press it in its current form.
	Together, this Bill and last year's Pensions Act provide an integrated package of reforms that build on and carry forward the analysis and recommendations of the Pensions Committee. I place on record, again, our gratitude to the three Pensions Commissioners, the noble Lord, Lord Turner, Jeannie Drake and Professor John Hills for all that they have done to help us face up to the challenges, and legislate for solutions that are affordable and sustainable in the long term. Last year's Pensions Act provided a simpler, more generous and widely available state pension. It addressed and corrected the historical inequalities in women's state pension entitlement, provided for gradual increases in state pension age, and ensured sustainability in the long term. Taken together, these reforms set out a solid foundation upon which people can plan for retirement.
	This Bill, as the noble Lord recognised, makes changes primarily to the private pension system. As the amendment sets out, the Bill ensures wider availability of pension savings opportunities, but I suggest that it does more than this. In establishing a personal accounts scheme, it specifically targets a market that has been poorly served by existing pension providers. Those on low to moderate incomes will—many for the first time—have an opportunity to save for retirement in a simple, low-cost scheme. In encouraging people to take personal responsibility for their financial security in retirement, our policy on auto-enrolment will help individuals to overcome such barriers to saving as inertia. The Bill provides safeguards on auto-enrolment, such as the right to opt out, the definition of a jobholder, and enforcement and compliance provisions to ensure that the policy is not undermined. The core policy principle is to make inertia work to the benefit of individuals, not against them.
	Another key feature is to give people an incentive to save for their retirement, requiring the state, the employer and the individual to contribute towards pension savings. Finally, and importantly, in protecting and maintaining the existing market, we propose a number of measures that ensure that the personal accounts system stays focused on the unserved target market. These measures will minimise the burdens on employers in complying with the duty to register qualifying schemes and to contribute 3 per cent; roll back some of the regulatory burden on existing schemes to simplify their administration; and foster compliance by providers, employers and individuals in a light-touch but effective way.
	I acknowledge—and we will surely debate—the points made by the noble Lord, Lord Skelmersdale, about levelling down, savings incentives, auto-enrolment, to which I have referred, and issues of low cost. The noble Lord, Lord Oakeshott, suggested that they would be better debated in Grand Committee than in this Chamber, which is a fair point. I would have preferred to debate them in Grand Committee, but the decision is not ours and we are happy to debate them wherever the powers that be determine.
	The noble Lord, Lord Lyell, specifically raised the issue of increasing longevity. One of the issues at the heart of Turner commission's report, on which this Bill and last year's Act are built, is the need to make sure that this is addressed and we have a system that is sustainable in the long term. I quote some statistics, which I have quoted once before. DWP statisticians have worked out that somebody alive today, aged 59, most likely a woman, will live to be 120. That means that next year, halfway through her life, she would get her state pension. That encapsulates the challenges of pension provision.
	We will debate the detail in the coming weeks, but the broad objectives of the package, which go further than the noble Lord's amendments, are built on lengthy discussions in Parliament, with interested external organisations and with the general public. The commitment and effort, shown on all sides in the other place, to raising awareness, deepening understanding and widening the circle of consensus is exemplary. It is a key consideration if we are to give people confidence and certainty for the long term. I applaud and warmly welcome that effort and commitment and I do not think we disagree about the general objectives of these reforms in terms of what they are or should be, but I do fear that the amendment is not an entirely full reflection of those objectives. On that basis, I would ask the noble Lord not to press it.

Baroness Thomas of Winchester: I feel slightly warmer about the amendment than does my noble friend on the Front Bench. I would call it more of a rudder for the whole Bill, putting it into context and giving it coherence. Surely the fact that not everything is in the objectives should not mean that we should not have any kind of statement on the front of the Bill. I believe that the expression is, "The best is the enemy of the good", so I feel strongly that it should be there.

Lord McKenzie of Luton: If we set out something at the start of the Bill which we say encapsulates its objectives and it does not do that in a complete fashion, we run the risk that that will create issues around the interpretation of the legislation. We have to be mindful of that.

Lord Lyell: I wonder if the Minister is aiming at me as the open target. I am 69 years old, I have not changed sex yet, but according to the article I read out, there is a chance that I might still be here. Perhaps I might be the one; he might consider that.

Lord Dearing: Perhaps the proposed introductory clause is imperfect, but I would be interested to know if the Minister is prepared in principle to insert a more accurate form of words should the amendment be withdrawn.

Lord McKenzie of Luton: That is an entirely reasonable request and I am certainly happy to see if what I sense is the view of the Committee can be met. I do not commit to anything, but I shall take it away to consider whether we can construct something that we would see as more complete.

Lord Skelmersdale: I am extremely grateful to all noble Lords who have taken part in this short debate. I say to the noble Lord, Lord Oakeshott, that not I, he or the Minister are even micro-members these days of the usual channels. As I said in my opening speech, we are where we are and we have to make the best of it—and I am sure we will.
	I am sorry that what I said has given rise to something that I tried desperately hard to avoid; namely, a Second Reading speech. I agree that the Minister was tempted by my noble friend Lord Lyell, who of course reminded us of why we are here and what last year's pensions Act and this Bill, taken together, are for. I am well aware that the danger inherent in purpose clauses, especially at the beginning of our proceedings, is that not all the amendments may be incorporated in a Bill; indeed, it is just possible that not all the clauses currently in the Bill will, as the Minister would like to have us believe, be incorporated. When we send it back to another place, they will all be encapsulated in it.
	I ask the Minister and the rest of the Committee to look at the amendment again. I defy any noble Lord to say that the phrase "new or"—not "and"—
	"better ways of providing such",
	does not cover any possible eventuality. It certainly covers personal accounts—that was a complaint of the Minister's. The words in the amendment were not chosen at random; they are to be found in Section 1 of the Courts and Legal Services Act 1990. If they were good enough for Treasury counsel then, they are certainly good enough for me now, and I hope the Committee will think so too. I wish to test the opinion of the Committee.

On Question, Whether the said amendment (No. 1) shall be agreed to?
	Their Lordships divided: Contents, 133; Not-Contents, 147.

Resolved in the negative, and amendment disagreed to accordingly.
	Clause 1 [Jobholders]:

Lord McKenzie of Luton: moved Amendment No. 2:
	Clause 1, page 1, line 7, leave out "an employee or" and insert "a"

Lord McKenzie of Luton: In moving this amendment, I shall speak also to the other amendments in this group. The group of amendments is designed to clarify the coverage of the Bill in terms of the employer duty by removing unnecessary references to "employee". In employment legislation, all employees are also workers. The term "employee" is a subset of "worker". For the purposes of the Bill, it is not necessary to refer both to "employee" and "worker". The amendments therefore simply remove the unnecessary references to "employee" and insert other terms such as "worker" and related expressions. This simplification eases the burden on employers, as they will not have to consider whether an individual has been engaged as an employee or a worker before complying with the employer duty. It will also mean that the provisions are in broad alignment with employment legislation such as the working time regulations and the National Minimum Wage Act.
	By using "worker" and capturing agency workers in the coverage of these reforms, we are ensuring that parts of the employment market are not inappropriately favoured. It is important that such individuals who are not being served by the existing pensions market should have the opportunity to start or continue saving towards their retirement, with the benefit of a minimum employer contribution. I beg to move.

Lord Skelmersdale: I am grateful to the Minister for sending me a grid of government amendments, some of which, like these two, are purely about drafting. As the Committee will know, one of my interests is drafting, so I have looked at these with particular care. The Minister need not look so shocked. When I first read the Bill, I noticed that it was littered with references to "jobholder", "employee" and "worker". I found in Clause 1, for example, that I simply could not distinguish between "employee" and "worker". I am glad that, on reflection, the draftsman could not either. There are still references to "employee" in Clause 55, but no longer to "worker" in Clause 77. And what about Clauses 78 to 85?
	Rather than make a meal of it and put down endless amendments, I ask the Minister to have the rest of the Bill looked at again, now that a "jobholder" is purely a worker for the purposes of Part 1, to see if other simplifications can be made elsewhere to tidy up any confusion that may remain.

Baroness Turner of Camden: I thank the Minister for this amendment. I have received a briefing from the TUC, which is also very supportive of this. It believes that otherwise some unscrupulous employers might try to avoid having a contract of employment with their staff so that their workers would enjoy fewer rights and less security. I am pleased that the amendment, by emphasising the title "Jobholders", will restrict that from happening. I think it was at Second Reading that we introduced the further point that agency workers will not be debarred from belonging to schemes under the Bill.

Lord McKenzie of Luton: I am grateful for the responses from both noble Lords, particularly from my noble friend who has referred to agency workers. This is an important provision in the Bill.
	I am happy to ask officials to look at the remaining clauses in this part of the Bill to see if any further tidying up needs to be addressed. I had a quick flick through myself and could not readily see any, but we will take it away and liaise with the noble Lord, Lord Skelmersdale, if there is anything more specific. Indeed, if, on reconsideration, he wants to raise any specific points with officials, he is just to let us know.

On Question, amendment agreed to.

Lord McKenzie of Luton: moved Amendment No. 3:
	Clause 1, page 1, line 8, leave out "a" and insert "the worker's"
	On Question, amendment agreed to.

Baroness Noakes: moved Amendment No. 4:
	Clause 1, page 1, line 8, at end insert—
	"( ) who is not a non-executive director,"

Baroness Noakes: I shall speak also to Amendments Nos. 43 and 122. These are probing amendments designed to ascertain the Government's position in relation to non-executive directors. I declare an interest as a non-executive director in what passes for my spare time.
	I know that the Minister is aware that it is not normal practice for non-executive directors to take part in any pension schemes that are available for staff and for executive directors. Nor do they receive any uplift to their remuneration to reflect the non-availability of pension benefits. For the vast majority of non-executive directors, what you see in terms of directors fees is what you get, there being no hidden extras.
	The same is very largely true for chairmen, who are generally also non-executive. Pension benefits are not a normal part of the remuneration of non-executive chairmen. It is not unknown for chairmen to be executive or semi-executive, especially in the non-listed space and to be paid accordingly, but for non-executive chairmen, pension accrual is unusual.
	The position, as I understand it, is almost exactly the same in the public sector. We discussed these issues during the passage of the previous Pensions Bill, now the Pensions Act 2007, when we debated the creation of the Personal Accounts Delivery Authority. The Minister will recall that some very odd provisions about pensions for non-executives were in the Bill, but he accepted that they were out of line with policy guidance and produced government amendments to put the position back to where it should have been; namely, that the non-executives did not get pensions.
	In this group of amendments, I have offered two possible ways of excluding non-executives from auto-enrolment. The first, in Amendment No. 4, would remove non-executive directors from the definition of a "jobholder" by adding another paragraph to Clause 1. The second way, in Amendment No. 43, would remove non-executive fees from the definition of "qualifying earnings" in Clause 12 by adding a new subsection after subsection (3). To support either or both of those amendments, Amendment No. 122 would add to the definitions in Clause 86 that of "non-executive director". The Minister will note that this covers both companies and other corporate bodies and hence should deal with the quangos that litter the public sector.
	This definition may not catch absolutely everyone in the public sector—I am thinking about, for example, the various non-executive members of departmental boards. The status of those individuals is somewhat ambiguous. They are not boards of a corporate body but pretend boards, aping what happens in corporate life or quangos. When we considered the Commissioners for Revenue and Customs Bill in 2005, we raised this point in Grand Committee in connection with the non-executives on that board. The noble and learned Lord, Lord Goldsmith, then the Attorney-General, said:
	"In line with the recommended practice for central government departments, the non-executive directors of the predecessor departments"—
	that is, the Inland Revenue and Customs and Excise—
	"are not employees. The same arrangements will follow forward into Revenue and Customs".—[Official Report, 22/2/05; col. GC 250.]
	The two non-executives on the board of the Treasury, for example, are not employees, but I assume that they are "jobholders" within the Bill. How do government departments intend to treat their non-executive directors under the Bill?
	I return to my main theme. It is quite simply not market practice in either the public or private sectors for non-executives to be treated as receiving pensionable earnings. But without amendment, the Bill would change that practice. It would not be legal for companies or the public sector to advertise for non-executives on a basis which excluded pensions, so the Bill really will change the practice. Do the Government really need to do this?
	I am sure companies do not want to enrol their non-executives. Most, though I concede not all, non-executives do not expect or want to accrue pension rights in respect of those positions, and it is very clear that non-executives are certainly not in the target group at whom this Bill is aimed.
	The Minister may well say that it is up to the non-executive to opt out but they may not do so, whether by accident or design. Indeed, signing on as a non-executive does not involve turning up to the personnel department and getting lots of bits of paper to sign. Business life at board level is just not like that.
	I hope therefore that the Minister will agree that we need to find a way of reflecting the fact that this group of employees, jobholders or whatever, as non-executives should not be dragged into auto-enrolment and all that that entails. I beg to move.

Lord Oakeshott of Seagrove Bay: This seems a very sensible and reasonable amendment. Almost by definition, non-executives are in office for only a few years. It would be quite messy, from the point of view of personal accounts, to include them. If we think of high-profile boards non-executives have recently been on—for example, Northern Rock—we realise that the last thing we would want would be that they should accrue pension rights. Indeed, it would not be normal practice. This seem, therefore, to be a perfectly sensible amendment and I do not see why personal accounts should make a major change in established practice. As the noble Baroness said, non-executive directors are not part of the target market.

Lord Tunnicliffe: Up until a few weeks ago I, too, would be declaring an interest in this and I, too, confirm that both in the public and private sectors I have never received any pension remuneration as a non-executive or chairman.
	Clause 1 sets the core scope of this package of reform by establishing the group of individuals who qualify for workplace pension savings with a contribution from their employer. We call individuals who are workers between the ages of 16 and 75 who ordinarily work in Great Britain and have qualifying earnings "jobholders". This group of amendments seeks to exclude non-executive directors from the scope of these reforms. However, this is not necessary because Clause 1 requires an individual to be a worker in order to be a jobholder. Non-executive directors are not workers—

Noble Lords: Ha!

Lord Tunnicliffe: I thought that might raise an outcry—as they are not employed under contract for their services by the companies to which they provide those services. Instead, non-executive directors are appointed as office-holders and therefore fall outside the scope of these reforms. Office-holders are excluded unless specific provision is made to include them. We have no plans to take such steps for the purpose of these reforms. Amendment No. 43 would exclude non-executive directors' fees from qualifying earnings. This is similarly not required as such fees would not fall within the scope of these reforms.
	From my own recollection, I believe that non-executive directors in the public sector are also office-holders. I will write to the noble Baroness, if she will forgive me, having checked the position as far we are able. I therefore urge the noble Baroness to withdraw these amendments.

Lord Oakeshott of Seagrove Bay: Did I hear the Minister right? Did he say non-executive directors are not under contract? They might be office-holders, but all the non-executive directors I know have contracts for serving on boards. What is the basis for saying that they are not under contract?

Baroness Noakes: Before the Minister replies, as I mentioned at the outset, I declare an interest: I am a non-executive of several companies and have been of more in the past. In each case, I have had a contract. I also rather resent the suggestion that I am not a worker.

Lord Tunnicliffe: I am sure the noble Baroness works very hard but company law details directors as office-holders and they receive fees. I have in my own experience come across this requirement from legal advisers. If Members of the Committee would like us to provide some chapter and verse on the relevant parts of the law, I would be happy to do that.

Baroness Noakes: I raise this as a technical issue. It needs to be clear beyond peradventure, because otherwise it would change market practice and cause a lot of problems. I am grateful for the comments of the noble Lord, Lord Oakeshott, who referred to the sort of problems that may occur.
	I am not convinced by the argument that, because one is an office-holder, one is not also under contract as an employee. My understanding is that quite the reverse is the case, and the provisions will not necessarily deal with all the issues that I have raised around the public sector. The department needs to take this away and look at it further. I am very happy to engage in any discussions with the Minister's officials if they would like to know what a modern non-executive's contract actually looks like.
	This was a probing amendment, but this is an important issue that we need to resolve before Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 1 agreed to.
	Clause 2 [Continuity of scheme membership]:

Lord Skelmersdale: moved Amendment No. 5:
	Clause 2, page 2, line 4, leave out ", or make any omission,"

Lord Skelmersdale: It was not intended that this amendment should pre-empt what the Minister would say on the next amendment, which is grouped with it, but it so happened that I managed to get this amendment down to the Public Bill Office first, with the Minister following on. The reason why I tabled it in the first place had nothing to do with the Minister's Amendment No. 6, although it is grouped with it; it is purely and simply a probing amendment to explore the burdens that auto-enrolment will place on employers.
	As I understand it, Clause 2(1) prevents the employer of a worker in a qualifying scheme from taking any action to dissuade him to leave the scheme while he remains in that employment, presumably with or without the employee's approval. That is all well and good; I have no trouble with that at all.
	My amendment would remove the words, "or make any omission", for two reasons. The first is to ask the Minister to give us an example of the sort of omission that the Government are thinking of. I know that there is a small reference in the notes on clauses, but I do not think that it is as complete as the Minister could make it, if he wished to.
	The second reason is to highlight the additional work that auto-enrolment will inevitably place on the shoulders of employers. I have no doubt that large employers, with their HR departments, will not have too much difficulty with those extra burdens, but what about small and medium-sized enterprises? Have the Government made any estimate of the number of these that are likely to have schemes that will qualify? What demands does the Minister expect to be placed on them? How much paperwork and other administrative burdens will those employers have to deal with? Does he really believe that, even though it will be illegal for them not to make any act or omission, some will not try it on?
	In my research this morning, I came across an article that was prompted by the National Association of Pension Funds, which suggested that many thousands of pounds might be necessary to alter the schemes to make them qualify. Both my noble friend and I will bring up that point on later amendments, but for now will the Minister provide answers to my questions? I beg to move.

Lord McKenzie of Luton: I shall speak to government amendments in this group and to Amendment No. 5, which I ask the Committee to reject. Automatic enrolment will establish the presumption to save as the new default. However, we need to ensure that employers do not enrol their workers one day then look for ways in which to take them out of workplace pension saving shortly after.
	Clause 2 prohibits employers from acting, or failing to act, in any way that results in the loss of active membership for a jobholder. The compliance regime in Chapter 2 will apply in respect of the employer duty in Clause 2. Breaches of the duty may, where necessary, result in the Pensions Regulator taking enforcement action in the form of compliance and penalty notices.
	Government Amendment No. 6 extends this prohibition to actions, or failed actions, of the employer that would result in a jobholder scheme losing its status as a qualifying scheme. This will provide additional security for the jobholders and help to ensure that continuity of good-quality pension saving is protected. For example, some employers like to be able to retain an ability to control their costs, by varying either contribution rates or the definition of pay on which contributions are calculated. Such employers who offer money purchase arrangements could use that ability to reduce the amount that they are otherwise required to contribute to meet the duty, thereby subverting the duty without terminating active membership.
	Opposition Amendment No. 5 would remove the element of the clause relating to employer omissions. We are clear that it is inappropriate to allow employers to benefit by failing to do what they are required to do, either deliberately or accidentally. Employers should be held responsible if they terminate scheme membership, even if that is by accident. Some pension providers may require an employer to keep their employee details up to date. We do not want a failure by an employer to provide such details to result in the termination of the active membership for any of their jobholders. This amendment, however, would undermine the duty on employers to maintain active membership of a scheme and could increase the number of jobholders who come out of pension saving without having made the decision themselves. That would undermine the central objective of these reforms.
	The Government recognise that some employers voluntarily pay higher contributions or offer schemes with high benefits significantly above the default. We recognise that, in the longer term, this is to the advantage of their workers and we want to support these employers to continue to do this. Clause 4 therefore enables an employer offering higher-quality pension provision under the employer duty to be able to defer automatic enrolment for any or all of their jobholders for a limited period, the details of which will be set out in regulations—for example, the length of the period.
	Amendments Nos. 13 and 14 ensure that an employer who takes advantage of the facility to defer automatic enrolment must guarantee membership of the higher-quality scheme for a minimum period. If an employer is unable to maintain membership of the higher-quality scheme, through no fault of their own or of jobholders, regulations made under a new clause to be introduced by Amendment No. 21 will require the re-enrolment of a jobholder into alternative higher-quality provision within a set timeframe. Therefore, I urge the noble Lord either to withdraw Amendment No. 5 or ask for it to be rejected.
	The noble Lord asked a number of questions about the costs of automatic enrolment and re-enrolment. The whole thrust of these provisions is to make sure that the arrangements are efficient and low-cost and we do not want to impose undue burdens on employers. We are not at a stage to be precise about what the process will be and quite how it will proceed. We will be looking in part to PADA and its work to advise and help us to develop these arrangements. However, the noble Lord makes a good point: we need to ensure that we do not impose undue burdens on employers by this process. There is no reason to assume that the process necessarily would, but those details have yet to be worked out and the matter will be developed in the coming months. We are absolutely convinced on the essence of the Bill, which is that auto-enrolment is the route by which we deal with the current inertia whereby so many people are prevented from saving.

Lord Skelmersdale: I am grateful to the Minister, who need have no fear on this occasion; I described this as a probing amendment, so of course I will withdraw it. I am relieved to hear that the Government intend to make this whole operation as low-cost as possible for employers because, without that, there would be very grudging acceptance, to say the least, of these reforms. I understand why the Government are not yet ready to be prescriptive on all this. In part, as the Minister almost said, he is waiting for PADA to tell him what is appropriate and, in part, the department is still working on this with the various stakeholders. I shall say a bit more about them in a minute.
	We must be extremely careful that we do not throw the baby out with the bathwater. We will have quite a discussion, in which I hope other Members of the Committee will join, on the qualifying schemes and the test scheme. From what the Minister has said, I assume that more, rather than fewer, existing schemes are likely to qualify, because that would keep the cost down. That is perhaps too broad a question for now and would be better repeated at another time.

Lord McKenzie of Luton: I am sure that we will debate that in some detail, but the Government are keen to make sure that all existing good-quality provision is maintained and we seek that objective through part of the structure of this Bill.

Lord Skelmersdale: I am delighted to hear that, but we will see. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McKenzie of Luton: moved Amendment No. 6:
	Clause 2, page 2, line 4, leave out from "which" to end of line 6 and insert "(without the jobholder ceasing to be employed by the employer)—
	(a) the jobholder ceases to be an active member of the scheme, or(b) the scheme ceases to be a qualifying scheme."
	On Question, amendment agreed to.

Baroness Noakes: moved Amendment No. 6A:
	Clause 2, page 2, line 12, at end insert—
	"( ) Subsection (1) is not contravened if the jobholder is offered active membership of another qualifying scheme within the prescribed period but does not accept that offer."

Baroness Noakes: This is a probing amendment, which would add a new subsection to Clause 2 providing an extra exemption from the clause's main duty on employers. The amendment was suggested to us by the Law Society of Scotland, which, as the Minister will be aware, is a fruitful source of technical probing amendments.
	We have been debating the main thrust of Clause 2, which is to ensure that employers do not force jobholders out of qualifying schemes. A number of exemptions in the clause appear to cover cases where a jobholder becomes an active member of another qualifying scheme or asks the employer to remove him from the scheme. However, the clause does not appear to cover the situation in which an employer reorganises his pension arrangements and the jobholder, when offered the opportunity to join another qualifying scheme, decides to opt out of membership. Subsections (2) and (3) do not apply, because the jobholder is not remaining or becoming an active member. Subsection (4) does not apply, because the jobholder has not requested the employer to do anything or to omit to do anything in relation to the existing scheme. The jobholder simply declines to sign up to the new successor scheme. Why should this result in the employer getting into trouble with the Pensions Regulator and bringing himself within the enforcement provisions of the Bill? I beg to move.

Lord Oakeshott of Seagrove Bay: I defer to no one in my admiration for Scottish solicitors. I have the pleasure of dealing with them a lot and, on this occasion, I would not want to add to their worthwhile comments.

Lord McKenzie of Luton: Automatic enrolment, as we have said, will establish a presumption to save as the new default. After jobholders have been enrolled, they have a right to remain in qualifying workplace pension saving. Clause 2 is designed to protect this right by prohibiting employers from acting or failing to act in any way that results in the loss of active membership for a jobholder. The compliance regime in Chapter 2 will apply in respect of the employer duty in Clause 2. However, employers will not be in breach of Clause 2 if they make arrangements for the jobholder to become an active member of another qualifying scheme within a prescribed period.
	The thrust of the noble Baroness's amendment would allow employers simply to offer membership of another scheme rather than enrol jobholders into one. If a jobholder declined membership of the replacement scheme, the employer would still be considered to have met the duty. That would undermine the core principle that jobholders have a right to participate in workplace pension saving without interference, unless they make the choice that they want to opt out or terminate membership later. Under this amendment, if a scheme closed, the jobholder could be forced to make a decision on whether to continue saving and might suffer detriment simply because they had not had access to the wider information associated with any decision to opt out under Clause 7, which provides a process for opting out. There is nothing to prevent a jobholder who wishes to terminate their membership of a scheme from doing so. However, we want any such choice to be free and informed.
	The amendment could, although I accept entirely that this is not its purpose, enable unscrupulous employers purposely to terminate a scheme and subsequently require jobholders actively to opt in to a replacement scheme. That would undermine both the principle of automatic enrolment and that of maintaining scheme continuity. The key to automatic enrolment is that it must be done by the employer, with the employee's choice following that in light of information that must be provided under those enrolment arrangements.

Baroness Noakes: I do not find the Minister's response very satisfactory. Part of the problem is that the DWP now seems to see unscrupulous employers round every corner, which influences its attitude to the way in which the Bill will be approached. That is unfortunate, given that the vast majority of employers are, and wish to be, compliant. The notion of the unscrupulous, non-compliant employer has been raised several times this afternoon and it has permeated all the proceedings and explanations in another place. That is unfortunate.
	Let us take this case. The Minister is saying that if, for perfectly good reasons, the employer decides to shut one scheme and start another, he must positively enrol all employees even if one says, "I have done pension saving. I am now 55 and don't want to save". Does the employer have to enrol that employee, who then has to opt out? Is the Minister really saying this because of the shadowy fear that there might be the odd unscrupulous employer who could not be caught by some other compliance mechanism?

Lord McKenzie of Luton: In essence, that is the thrust of the Government's position. Of course, I accept that the vast majority of employers wish to be compliant and to engage in this legislation positively. Automatic enrolment is fundamental to the legislation and that process will bring with it information that is provided to the jobholder, who can then decide whether to stay in or opt out. If one misses the loop of automatic enrolment, there is a real risk that a fundamental part of this legislation will be undermined.

Baroness Noakes: I said that this was a probing amendment, so I shall not press the point. Instead, I shall ask the Law Society of Scotland to read what the Minister has said. I should just say that we are talking not about initial enrolment but about somebody who chooses not to stay in replacement arrangements. It is not a very big point, which is why I shall not spend any more time today on it. The Minister has the wrong approach. He is simply creating bureaucracy and paperwork for no good purpose. If that is how the Government approach the whole Bill, we will have more trouble as we progress into more difficult areas. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 2 agreed to.
	Clause 3 [Automatic enrolment]:

Lord Skelmersdale: moved Amendment No. 7:
	Clause 3, page 2, line 18, leave out paragraph (a)

Lord Skelmersdale: Clause 3 covers the nuts and bolts of automatic enrolment. We on these Benches totally agree with the premise—there should be no doubt about that. However, that does not mean that we do not have questions. Subsection (1) applies to workers from the age of 16 to retirement age, or what the Bill calls "pensionable age". Quite when that is is the subject of a later amendment. However, from the age of 16 to the day before his 22nd birthday, the employee can self-enrol in personal accounts or in his employer's pension scheme, as long as the employer is permitted—"qualified" is the technical word—although he does not have to. In that situation—in other words, before the employee's 22nd birthday—the employer has the option to contribute under personal accounts. It is also an option, presumably, under personal and occupational pensions—it depends how the scheme is set up.
	I tabled Amendment No. 7 to explore what will happen when a young person who is already enrolled in a scheme hits the lower age limit of 22 and becomes eligible for auto-enrolment. It is not simple, but it seems to me that, if we are talking about personal accounts, that is the trigger for the employer to contribute, if he has not already been doing so. If we are talking about occupational or personal pensions, it is a different matter. The employee is already in the scheme and suddenly gets a notice saying, "You need to auto-enrol". Is that a sensible way of proceeding? I do not understand. In particular, I am interested in how auto-enrolment will be handled if, as I said, the young person is already participating in a qualifying pension scheme.
	We have listened over the past few weeks to numerous contributions from various outside bodies that offer high-quality pensions to their employees, many of whom are under 22 years old. I refer to one in particular. Tesco sponsors a pension involving auto-enrolment from the age of 21 and fully intends to make the necessary tweaks for it to qualify. It already targets literature explaining the advantages of its pension scheme at its younger employees, and has several members younger even than 21. How will the auto-enrolment plans that the Minister has described as being at the heart of the Bill work in this situation? I beg to move.

Baroness Hollis of Heigham: I support the amendment and only wish that the noble Lord had gone further. I would like to see personal accounts, as structured for those over 22 and with auto-enrolment, being available for people at the age of 16. Let me explain why. I read the House of Commons debates and, as far as I could see, the Government's main concern, which I can understand, is that there is a lot of job movement at that age; therefore there is a significant hassle factor and it is possibly not worth doing. I am not sure that I accept that, because the whole point of personal accounts is to produce the pot that you take with you. Therefore, after the initial hassle of setting it up, you should be able to port it with you.
	There are two, possibly three arguments that I ask my noble friend to consider. I understand that you can voluntarily enrol but I should like to go beyond that. The first point is to instil as early as possible the habit of saving. If you are in a job at the age of 18 or 21 and are not contributing to a pension, and then suddenly at the age of 22 auto-enrolment arises and you experience a drop in income, there may well be an increased psychological willingness to opt out. However, if the habit of saving has been instilled in you and you pay your pension contribution along with your tax and national insurance from the first day that you are in work, and you are above the LEL, the sums involved will be quite modest. Often, they will be only £3 or £5 a week for the employer or the employee on, say, half-median earnings. We are talking about quite modest sums, but the habit of saving will be in place and there will be less risk of dropping out from the option of auto-enrolment at the age of 22.
	The second point is that it really is worth making those contributions. I am not confident about my statistics, as I have been trying to work them out myself, and I defer to PENSIP or any other model. For example, you would normally save on half-median earnings—which for a woman is about £11,000 a year—for 30 years in a personal account. However, I calculate that if you started six years before that, you would add 50 per cent to your total pot or possibly more because you would have started at a young age and would have a much longer investment return. That is particularly salient for women because their peak earning age is 29, as opposed to 42 for men, because they are most likely to earn before they have children. When they have children, half of them stop contributing to a pension. Therefore, for young women, in particular, who may be training to become a hairdresser, for example, it is key that we increase the number of years in which they are likely to contribute to a pension before they settle with a family, which almost always adversely affects their pension contributions.
	For those reasons, I am not sure that the hassle factor is a substantial argument. It is desirable to inculcate the habit of saving, rather than risk people failing to auto-enrol at the age of 22 because they are not used to making payments. That is the case, above all, because those six years of early return can increase the value of a 30-year pot by something like 50 per cent. That is particularly important for low-paid women who may be part-time workers. I hope that my noble friend will reconsider this matter, and I shall be bringing forward something similar in a later amendment. Obviously, the scheme is discretionary and a young person can contribute if they wish, but what I should like to see is that where that young person "does", the employer "must". In that way, the scheme would be made worth while.
	I hope that the noble Lord, Lord Skelmersdale, will accept a wider interpretation than he may have originally intended with his amendment. I also hope that my noble friend can take this matter away and think again about the outcome that we want, which is to ensure that low-paid people who work part time—women in particular—retire with the best possible pension. We should do everything we can to ensure that they start paying in as early as possible and as easily and continuously as possible, and this amendment could be a means of achieving that.

Lord Dearing: What the noble Baroness said seems very persuasive. People who leave school early are least likely to earn high incomes. Therefore, the earlier they start to contribute, the more effectively they are able to provide for their old age and the less likely they are to be a burden on society. Therefore, for national as well as individual reasons, this proposal makes a lot of sense.

Lord McKenzie of Luton: This has been an important debate. As we have said before and will doubtless say again before the end of these proceedings, automatic enrolment is at the heart of this package of reforms. However, the amendment seeks to remove the lower age limit to allow jobholders to be automatically enrolled between the ages of 16 and 22. That would undo the balance that we have struck between maximising saving through automatic enrolment and minimising employer burdens by limiting automatic enrolment to between the age of 22 and state pension age. In addition, requiring employers automatically to enrol jobholders aged between 16 and 22 would increase the burden on them.
	We believe that selecting the age of 22 strikes the right balance between the age when job tenure becomes more stable and encouraging workers to start workplace pension saving at an early age. Starting automatic enrolment at age 22 will also minimise costs associated with frequent job turnover among the young, especially students, which might reduce the incentive to hire younger workers.
	As has been recognised, we are not excluding young people from saving in a workplace pension as jobholders between the age of 16 and 75, because they can opt in to workplace pension saving and receive an employer contribution. I think that both my noble friend and the noble Lord, Lord Skelmersdale, assumed that there would be no automatic employer contribution if a 16 year-old opted in.

Lord Skelmersdale: There is no automatic employer contribution.

Lord McKenzie of Luton: No, there is. We need to distinguish people whose earnings are below qualifying earnings and people between the ages of 16 and 75 who opt in. They get an employer contribution if they do so—I am looking to the Box to confirm my understanding.

Baroness Hollis of Heigham: If my noble friend is correct, I shared the mistaken assumption of the noble Lord, Lord Skelmersdale. If that is the case, it is even more important that there is automatic enrolment.

Lord McKenzie of Luton: It definitely is the case; I can confirm that.
	My noble friend makes a very important point about instilling the habit of saving as early as possible. We recognise that. We are dealing here with a balance. Younger people, especially if they are students, tend to have a succession of jobs, and there are administrative costs associated with that. I am interested in my noble friend's calculation of the impact on the pot. I am happy to look at that; perhaps we may get together after the Committee to work through the calculations.
	The noble Lord, Lord Skelmersdale, asked what happens if someone elects to be enrolled and then reaches the age of 22. If they are enrolled in a qualifying scheme, under Clause 3(3), reaching the age of 22 does not require any further action on the part of the employer, because they will then become a jobholder and will be an active member of a qualifying scheme.

Lord Oakeshott of Seagrove Bay: I deliberately did not intervene earlier because I find this quite a difficult balance to strike in this debate and I was interested to hear the thrust of the Minister's reply. Does he have any statistics to help us further? Although one's instinct is obviously that job turnover is much higher and that there would be a lot of administrative cost from including later teenagers and 20 and 21 year-olds—one is conscious of the administrative cost for employers and possible extra costs for the Personal Accounts Delivery Authority of having a lot of small and very mobile accounts—that would help us decide. The point made by the noble Baroness, Lady Hollis, about instilling the savings habit is valid, although I think her figures are a little optimistic when it comes to how much difference it makes. I should not have thought that 16, 17 and 18 year-olds are earning anything like as much as average female earnings. Even accepting her point that female earnings peak earlier than those of men, I should not have thought that we were talking about very large amounts of money. I would be interested to hear further statistics on job turnover in that group.

Baroness Hollis of Heigham: I would also very much welcome statistics on that. The figures that I gave were for half median earnings, not median earnings. I absolutely take the point that a 16 year-old will not be on median earnings, but half median earnings—£10,000 to £11,000—for a young woman who by 18 or 19 is a qualified hairdresser is perhaps not an unreasonable assumption.

Lord McKenzie of Luton: I have some statistics. I am not sure that they cover precisely what the noble Lord, Lord Oakeshott, wanted. If we assume that those aged 16 to 21 opt out at the same rate as 22 to 24 year olds, there would be a £77 million or 10 per cent increase in employer contribution costs. Removing the lower age threshold of 22 would increase the number of people eligible for automatic enrolment by some 2 million—assuming working age starts at 16—notwithstanding plans to encourage people to stay in education or training. This group of 2 million young people earn, on average, less than half as much as those aged 22-plus. One of the ramifications of that would be that if the group do not opt out, this amendment is likely to lead to many more small pots which are expensive to administer.
	We have had an interesting discussion of this issue and we certainly want to have another look at it. To confirm what I said earlier, in terms of someone who is aged 16 or 17 or under 22 opting in, Clause 1 defines a jobholder and all jobholders are entitled to an employer contribution on their qualifying earnings. If they do not have qualifying earnings, they would not get an employer contribution. If they opt in, whether they are above state pension age or between 16 and 22, they would get an employer contribution on their qualifying earnings.

Lord Skelmersdale: There has obviously been some confusion resulting from the research of various Members of the Committee. It would be extremely helpful if the noble Lord could point to where in the Bill it says that if a youngster—in other words, someone between the ages of 16 and 22—is enrolled in a personal account, the employer is duty-bound to contribute at personal account rates. While the Minister was speaking I was trying to have a quick gander at the beginning of the Bill but failed to find any reference one way or the other.
	I do not understand how the amendment works for 16 to 22 year-olds, whether or not they are enrolled in a personal account, or indeed any other sort of pension scheme. I am not sure that it is right to pursue it just at this moment, unless the Minister has extra information that he can give us. I should be most grateful for one of his very explicit letters in due course, if he feels like writing one, as I am sure will the noble Baroness, Lady Hollis, on this occasion.

Lord McKenzie of Luton: I will see how much I can deal with now but I am sure that I will end up writing in any event. On the issue of the employer contribution, you have to go right to the start of the Bill, to Clause 1(1), which defines a jobholder as an employee—or now, a worker—who works or ordinarily works in Great Britain and who is aged at least 16 and under 75. That is the key to the employer contribution. You then have to look at Clause 6(3). If people are active members of an automatic enrolment scheme, then you get the requirements for the employer contribution for that scheme if it is going to be an automatic enrolment scheme to satisfy the quality tests and the qualifying scheme test. That is the route into it for someone aged between 16 and 75. It is different for someone who does not have qualifying earnings. Someone who does not have qualifying earnings is not, within that definition, a jobholder.
	I shall have one more go about how it works for someone who opts to be enrolled under the age of 22 and then becomes 22. He or she is enrolled in a qualifying scheme and therefore when it comes to issues of automatic enrolment the employer is relieved of the obligation to take further action by Clause 3(3). Subsection (2) is the provision that makes the employer undertake prescribed arrangements by which the jobholder becomes an active member, because subsection (2) does not apply if the jobholder was an active member of a qualifying scheme on the automatic enrolment date. Therefore, there is no need to do anything if they are already in the scheme. I hope that has clarified matters. However, if it has not, I am very happy to write to the noble Lord to make sure that it is very clearly understood.

Lord Skelmersdale: I am afraid not, because once you are in the scheme and over 22 you have to re-enrol every three years, as we will debate in a little time. The noble Lord looks confused.

Lord McKenzie of Luton: If you are in and remain in a scheme, the question of re-enrolment does not arise. Issues of re-enrolment are focused on when people cease to be members of a scheme, and it is a rolling process to make sure that people who are not involved in saving initially are caught and involved later.

Lord Skelmersdale: I may have been barking up the wrong tree. As I understand it, if you are an adult—22-plus, for these purposes—and on your birthday you enrol in a personal account for the first time, all the advantages of enrolling in such an account will accrue to you. However, one of the duties of that enrolment is that you are asked every three years whether you want to continue saving into the scheme. I may have misunderstood that. My noble friend Lady Noakes says that I have, so on this occasion the Minister can save his breath and she will take me aside quietly at some appropriate moment in some, I hope, appropriate place and explain it to me.

Lord McKenzie of Luton: I object most seriously to the fact that the noble Lord takes the word of his noble friend but refuses to take the word of the Minister.

Lord Skelmersdale: I was just suggesting that, for the moment anyway, the Minister might save his breath. If he does not want to, he can carry on explaining to me why I am wrong.

Lord Oakeshott of Seagrove Bay: It sounds like a case of, "Trust me—I'm not a Minister".

Lord Skelmersdale: I could not possibly comment. Enough of this frivolity. I will consider carefully what the Minister and the noble Baroness, Lady Hollis, said. If she reduces the £5,035 figure—the entry LEL—to zero or thereabouts, that might well put enormous burdens on small and medium-sized enterprises. We might be able to discuss that on a later amendment.

Baroness Hollis of Heigham: I shall see whether I can persuade the noble Lord.

Lord Skelmersdale: I am sure that the noble Baroness will see whether she can persuade me, but at the moment I am—what is the word?

Baroness Hollis of Heigham: Agnostic?

Lord Skelmersdale: No, not agnostic—suspicious. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Skelmersdale: moved Amendment No. 8:
	Clause 3, page 2, line 19, after "reached" insert "state"

Lord Skelmersdale: Here, perhaps I will make more sense and have a better understanding of what I am trying to get at. Clause 3(1)(b) states that the end of the automatic enrolment period is when the worker reaches pensionable age. This is yet another probing amendment, this time about the other end of the age range. I find "pensionable age" rather confusing, which is hardly surprising as the Explanatory Notes on the clause talk about "state pension age" as the upper automatic enrolment age limit. By referring merely to pension age, the Bill could mean that it is still talking about any auto-enrolment scheme, which could include permitted schemes that have a retirement age lower than state retirement age. If the Government mean us to believe the Explanatory Notes—if they mean state pension age—surely that needs to be shown in the Bill.
	There is an even more fundamental question. We will discuss the parameters of qualifying schemes when we come to Clause 15, but I should be grateful if the Minister could answer the question now. Could a scheme that allowed a jobholder to start drawing his pension at an age below state pension age qualify for auto-enrolment? This is important. I should also like to know whether someone drawing a pension from a previous place of work, which allowed early retirement, and subsequently working somewhere else until state pension age, is eligible for auto-enrolment. I suspect that he is still eligible, but starts the whole process again with his new employer. I find the drafting of Clause 3 confusing. I hope the Minister will be able to set my mind at rest. I beg to move.

Baroness Turner of Camden: I am puzzled by this. If you insert "state pension age", it clearly ties the scheme entirely to the current state pension age, but the state pension age may gradually increase as we all live longer. At the same time, there may be types of work where it is desirable that people do not have to work to state pension age before they get their pension. It depends on the kind of employment. It seems that not having "state" in the Bill allows for a degree of flexibility, which we may welcome.

Baroness Hollis of Heigham: My question is triggered by the contribution of the noble Lord, Lord Skelmersdale. I had assumed—this may be an error on my part—that a qualifying scheme would, nonetheless, not be disqualified by virtue of the fact that one could retire earlier than state pension age. If I am wrong in that assumption, what then happens to the tax-free lump sum, which at the moment one can draw aged 50? It is going up to 55 in 2010. If the noble Lord's fears are valid—which I hope they are not—does that suggest that different rules must therefore apply to the tax-free lump sum and when one may draw it?

Lord McKenzie of Luton: I shall not repeat the opening remark of my speaking notes, which says that automatic enrolment is at the heart of this package of reform. I can deal very swiftly with the point that has been raised about what "pensionable age" means. The definition is given in Clause 86:
	"'pensionable age' has the meaning given by the rules in paragraph 1 of Schedule 4 to the Pensions Act 1995".
	I know that that is familiar to the noble Lord. It links the state pension age and makes the proposed amendment unnecessary. It also picks up on the point made by my noble friend, because the definition includes the equalisation of women's state pension age when it increases from 60 to 65 between 2010 and 2020. It covers the subsequent increases introduced by the Pensions Act 2007—for both men and women—from 65 to 68 between 2024 and 2046. It locks into that definition.
	A number of other points were raised about pensionable age. The noble Lord asked whether a scheme could allow a person to draw a pension if they were below state pension age. Yes, it could, but that scheme must allow auto-enrolment to the age of 65. It would not prevent someone drawing a pension and retiring when they were below state pension age as long as it had the facility for someone to be auto-enrolled, should they so wish, up to the age of 65. The noble Lord also asked whether, when someone is already drawing a pension from a scheme, there would be a requirement to auto-enrol. To avoid the auto-enrolment requirement, a person would have to be an active member of a qualifying scheme. If they were not, the auto-enrolment procedures would apply. It might be that the decision would be to opt out, but it applies only if someone is not an active member of a qualifying scheme.
	I hope that that deals with the point. The fundamental point about the definition of pensionable age is that it locks into the state pension age as it is today and as it will progress under the reforms that are already provided for in legislation.

Lord Skelmersdale: So, the Bill as printed is confusing and the Explanatory Notes are right—I think that in précis is what the Minister is saying—and I am grateful. However, I think he would agree that the answer to his noble friend Lady Turner of Camden is that when the phrase "state pension age" is mentioned, it means the state pension age at the time and therefore so far as women are concerned, it is rising to 65, while in due course everyone will go up to 68. In the previous Pensions Bill, we tried to make this open-ended, but the Government were adamant that enough was enough for the time being, in other words up to 2050. Governments have a reputation, sometimes deserved and sometimes not, for short-termism, but I do not think that this decision fits into that category.
	I think that I now understand the position, so the amendment has served as quite a useful probe. I have to confess that I am not word perfect on the 1995 Act and I shall certainly look at it again. However, I rather doubt that I will need to come back to this point. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Thomas of Winchester: moved Amendment No. 9:
	Clause 3, page 2, line 22, at end insert "provided that, in the case of a person who has reached the age of 50, the jobholder must first have been offered face to face pensions and debt advice, consisting of at least one hour of generic financial advice received in an individual personal interview from a trained adviser in the parliamentary constituency where the jobholder has their main place of residence or employment"

Baroness Thomas of Winchester: In our debate on Second Reading, six speakers emphasised the importance of good quality generic advice being available for employees who may want to opt out of auto-enrolment. The Minister, using the broadest of brushes, said that individuals who are auto-enrolled would need accurate information, but will not "routinely need extensive advice" because of the employer contribution. This amendment is not designed for the majority of employees who will be auto-enrolled, but for those aged 50 and over for whom auto-enrolment might not be suitable because of the interactions with means-tested benefits. The amendment calls for the sort of advice that could be provided by CABs. Interestingly, Citizens Advice is piloting a generic financial advice project, and its interim report shows that pensions advice is at the top of its list of "most frequently raised issues", with 49 per cent of the clients in this project being over the age of 50.
	I gather from the Minister's office that the Government's proposals on a national money guidance service, which he mentioned in his winding-up speech at Second Reading, are due to be published in a month or two, presumably based on the Thoresen review. I would be glad to hear whether they are likely to give us any comfort. The Pensions Policy Institute, whose research is invaluable, does not appear to agree with the Government that advice is not necessary. Its analysis of auto-enrolment implies that,
	"people will need very clear information and generic advice to help them make informed decisions about whether they should stay in or opt out of personal accounts".
	It goes on to say that:
	"Designing information and generic advice in a simple and easy to understand way to help people decide whether or not to opt out will be"—
	I quote again—
	"an important test of the personal accounts policy".
	Help the Aged goes further in saying that such financial information and guidance is vital to the success of personal accounts, while Age Concern says that access is essential.
	The Minister has quoted these groups approvingly as being part of the consensus around auto-enrolment and personal accounts. I urge the Government not to cherry pick their comments and to take on board their clear call for such generic advice to be made available. I beg to move.

Baroness Hollis of Heigham: I declare an interest as trustee of the Pensions Advisory Service. I welcome the amendment. Whether its precise wording will finally be reflected in legislation is a different matter, but it is right that the noble Baroness should raise the issue of advice early in the Committee stage.
	Why? We all accept that conventional DC schemes carry a much greater risk for the employee than DB schemes in regard to investment returns, longevity and life styling, disinvestment returns, annuity rates—the noble Lord, Lord Oakeshott, has been campaigning about open markets and so on—inflation, assessment of household needs and, of course, over and beyond the investment and disinvestment risks, there is no PPF. All of this risk is laid on the employee. So it is not surprising that currently a great deal of interesting discussion is going on about hybrids, risk-sharing, career average and the later amendments on conditional indexation being run by the actuaries.
	But if the conventional occupational pension DC schemes are riskier than DB—which they are by far—personal accounts might be riskier still than the conventional DC scheme. There are a number of reasons for this. First, with personal accounts you are dealing with people with very low incomes. For those people— mostly women—the opportunity cost of saving is very high and issues of debt or divorce can devastate financial situations. Secondly, personal accounts are much more likely to deal with small pots because they will be used by low earners, often part time, and of course—an issue to which I shall return—the first £5,000 of income is exempt. This may mean that half of a median earning is not even covered by a pension contribution, leaving a small pot with all the risks, as the noble Baroness highlighted, of interaction with income-related benefits.
	Thirdly—this should be said in capital letters—there is the question of the small contribution of employers, at the de minimis level, to a personal account. The employee will pay in as much as in a conventional DC account at around 4 per cent; the employer, however, will pay in only half, at 3 per cent, compared to the DC average at the moment of 6.8 per cent, and even then, for someone on half-median earnings, on only half the income. So the employer will be contributing nearly 7 per cent on average into a DC pot on all earnings, as compared to an average of 3 per cent on only half earnings into a personal account. So the employee is taking all the risks, as in a DC scheme, but with very little of the financial cushion offered within existing DC schemes of virtually a two-to-one match by the employer of the employee's contribution, thus making the pay-to-save worth while. That equation is very much altered in personal accounts.
	So we will see women workers, especially older women, who are not sure whether they should opt out; and we may see, I fear, as with the reduced married woman's stamp in the past, more unscrupulous employers encouraging them to opt out. It is interesting that TPAS, the organisation in which I have declared an interest, was running a helpline earlier in the year for women seeking information about their pensions. Of its first 9,000 calls, 95 per cent were from women over 45. Over half wanted to buy extra contributions on the spot—a point to which I shall return—but their lack of knowledge about the basic state pension more than vindicated the noble Baroness's concern about this.
	I fear we may also see the media hyping up the risk that women should be encouraged to opt out along the lines of Mr Cazalet's remarks in the FT a few days ago, which asserted that for very many women it was better to keep their money in a teapot. That seems to me deeply implausible but as his report costs £1,600 a time, it was clearly not designed to be available to the women he claimed he was seeking to help or influence.
	Why do we need this amendment or a version of it? The noble Baroness rightly identified fears that older women will opt in when perhaps they would be well advised, if they had that tailored advice, to opt out. I have the opposite fear that they will opt out when they should not. The latest longitudinal research on ageing by the DWP, that the noble Lord, Lord Skelmersdale, and I were privileged to hear recently, shows that even for low-paid older women it can be, and usually is, worth saving. The DWP's own slides gave the example of a woman of 54 on half median earnings. For a contribution of perhaps £5 a week she could get, even with a very brief contribution record, a pot for trivial commutation of over £5,000, and might therefore have a little capital on which to retire. I emphasise the words "could" and "might" rather than "will". Both for those who may opt in when they should opt out and for those who may opt out when they should be opting in, because the trivial commutation pot is worth having and therefore it pays to save, they will need quite specialised advice, as TPAS helpline clearly shows. They may also need advice at the disinvestment end that the noble Lord, Lord Oakeshott, highlighted.
	We cannot build out all the risks. We cannot necessarily foresee for individuals' earnings, health and caring responsibilities. Who knows whether the benefits system 15 years down the line in terms of pension credits will remain as it currently is? But we know where the problems may occur for older people, particularly those who may be claiming housing benefit in retirement. For some, it might be right to opt out; for others, it may be sensible to hang on. However, the latest DWP research shows and the TPAS helpline suggest that people are in a very poor position to be able to make that judgment for themselves. Information may be enough for most, but it will not be enough for some. One at-risk group is older women and the Government must do more to ensure that they get the advice they need.

Lord Kirkwood of Kirkhope: I would like to add a brief contribution to this well focused amendment. There is a much broader debate to be had about generic advice and the Thoresen report, and the consultation and work that has been done will inform that process later in the year, but what is so attractive about this amendment is that it is saying that there are groups of people who are very clearly at risk. The two main policy levers and drivers behind this reform are getting auto-enrolment and the contingent employer contribution behind that. Auto-enrolment must succeed for this policy to make progress in the longer term. The Government sensibly are already indicating that come 2017 the whole thing can be looked at again and some in-flight adjustments can be made, and I welcome that. But there are at-risk groups which are identifiable right now. For people over 50 who are in social rented housing and on a low income, all the odds stack up. This group is easily identifiable from departmental records. We know where they live and we know the risks are likely to be greater. If they go inadvertently into auto-enrolment without thinking about it carefully, they could pop up in 2017 as a group whom we have collectively failed. It is not for the want of knowing in advance that they comprise a group that can be collectively failed. It would not be good for the continuation of a policy that, it is hoped, has a lifespan of 50 years or more, in order to address some of the points that the Turner commission drew to our attention as policymakers. It is not in our or anyone else's interests, be that a future Government or whoever, for the policy to fail. This is an understandable, measurable and identifiable group of people. We may hear from the Government that, "Face to face for everyone is too big a task", which I understand, but they cannot argue that in terms of the specific group of people who are identified in this amendment. Like the noble Baroness who has just spoken, I think the wording may not be perfect, but my noble friend has identified an important issue.
	We can argue about whether generic advice has a wider role to play in the longer term. Personally, I think that the work that the FSA is doing is exemplary in terms of the financial exclusion research, the promotion of policy and the attempt to give help and succour to people in the longer term on a broader perspective across the United Kingdom, as we all understand that the economy is less benign and that people are facing straitened financial circumstances.
	The Thoresen work, as deployed and advised by the work that is being done by the FSA, is very good. A perfect model is available to the Government in the form of the positive and constructive bits of Thoresen, along with the valuable work done by the FSA under my old friend Mr Chris Pond, who has had a distinguished track record over all these areas over many years. His work demonstrates to me—I have talked to him at some length—that the FSA is willing to play a major part in dealing with some of these issues and is capable of doing so.
	The FSA is also working with Citizens Advice. My noble friend is right to refer to that, because that body would be perfectly willing to take on contracts. It works in these areas and gives detailed advice on financial and other matters, which demonstrates that it has the skills, background and ability to deliver the policy.
	The department must know the overall figures that we are dealing with for the 50 year-old age group. That group will not be a huge number out of the 7 million target audience. If we identify them, with the advice available to the Government that I have just described, then the work that Chris Pond and the FSA are doing around Thoresen, combined with the capabilities that are clearly available in the 430 citizens advice bureaux and the 16,000 volunteers who are available to us, is unquestionably something that policy-makers in this House at this stage should be asking the Government actively to consider. It should not be for everyone; let us start with this group. Let us identify them, give them all face-to-face interviews if they need them and see what we can do for them. I am sure that that would have a beneficial impact on the whole of this reform and at least enable us to say in 2017, "Well, we did what we could and we gave the best advice possible". If the result in 2017 is failure, it will not be for the want of trying.

Baroness Greengross: I add my support to what noble Lords have been saying. It is essential that we get the right advice and help to this vulnerable group of people. After all, the whole initiative is designed to get the low-income and medium-income people, who are in most need of advice and help, to save for an adequate pension. We have identified the groups that need this sort of advice. I particularly support what the noble Lord, Lord Kirkwood, has just said. I say that as president of the Pensions Policy Institute and a trustee of the Resolution Foundation. The foundation did the initial work that led to the Thoresen review and identified the groups that are most at risk. We must get the right advice and help to the people who are the least likely to manage without it, which is the group that has been identified here. I strongly support the amendment.

The Lord Bishop of Durham: I support what has been said, but I was surprised to see in the amendment the words,
	"at least one hour of generic financial advice".
	I know from my diocese people such as those whom we are talking about. They are unlikely to be able instantly to latch on to the technical stuff that will be talked about. Specifying an hour seems extremely arbitrary, so I wonder whether instead there might be some way of listing the specific topics to be covered, recognising that some people may take a little longer to catch up with some of them and that by the time that even those who are moderately financially literate get to the age of 50 the pensions legislation may have advanced so far that it may be quite difficult to understand. I do not know how many topics would be covered under "generic financial advice", but I wonder whether they could be listed, as opposed to the arbitrary period of a single hour being specified.

Lord Skelmersdale: The right reverend Prelate has hit two nails very firmly on the head. "Generic financial advice" is a little like the motherhood and apple pie of the noble Lord, Lord Oakeshott, because it means different things to different people. For some of your Lordships who have just spoken, it is clear that it means pensions advice, whereas to me it means advice on savings. After all, it is total savings that will affect one's benefits and pension credit and so on when one comes to claim them.
	There is in this generic advice a great danger of what in an earlier Pensions Bill—I think that it was that of 2004—the noble Baroness, Lady Hollis, referred to as "moral hazard". Of course, I take note of the Thoresen review and report, but who will be responsible for this advice in individual cases? Will it be the global organisation that is set up, or will it be the individuals within that organisation? We live, alas, in an increasingly litigious society. If people feel that they have had the wrong advice, they may go to a pro bono lawyer and ask whether they can get recompense as a result. Nobody wants that. It is not good for auto-enrolment; it is not good for personal pensions; it is not good for savings generally. I worry about it.
	The other nail that the right reverend Prelate hit firmly on the head was the prescriptive nature of a part of the amendment. It states that the advice must be both face to face and, more important, last at least one hour. We all know that the general level of financial literacy in this country is abysmal. For many people, one hour might be scarcely enough; for others, it may be a fraction—but probably only a fraction—too long. I do not know how many noble Lords have been to the retirement conference hosted by one of the big insurance firms that takes place—I think, annually—in Westminster. That takes three to three and a half hours to explain retirement income and allied matters such as capital gains tax and capital transfer tax to people who are at least financially educated enough to go along and try to understand this advice and, one hopes, in many cases to act on it. However, I am afraid that I do not regard them as representative of the general mass of the population. I do not mean to be patronising in the least. I am sure that many people up and down the country would understand the advice and act on it, even if it is being given for, say, half an hour or 45 minutes. However, there are many of us—and at one stage in my life, that most certainly included me—who would have taken a lot longer to understand it.
	Having said all that, I believe that there is clearly a need for financial advice of a general nature. The real problem is how you can safely provide it without brickbats falling either on the Government of the day or on the organisation or individual members of the organisation that is set up to give it. I am glad that we have had this short debate, which I hope will colour our thoughts on later amendments. For now, however, that is my opinion on generic advice.

Lord Oakeshott of Seagrove Bay: As I drafted this amendment, I think that it is only fair for me to respond and explain, particularly for the noble Lord, Lord Skelmersdale, the thinking behind it. I thank noble Lords who have spoken for their general support. We should clarify that we are not saying that everybody has to have had advice in this category; they just have to have been offered it and to have the chance to have it. If they want only a quarter of an hour or half an hour, that is fine. We stress the "at least" element.
	The noble Lord, Lord Skelmersdale, can say that advice is a problem, but are we seriously saying that it would be satisfactory for the millions of people in this at-risk group just to be told to ring a number and press one, two or three? Are we telling them to go on to the world wide web, which seems to be the thrust of the Government's thinking, when many of them may not want to go on to the world wide web? They may not be comfortable with it; poorer people may not even be linked to it. We think that this is a sensible and balanced way of making sure that advice is available to those members of a high-risk group—anyone who has done any work on this admits that it is a high-risk group—if they want it. It is not prescriptive; it just says that an amount of generic advice—I stress that—would be available.
	The answer to the fair points made by the noble Lord, Lord Skelmersdale, about whether people will be sued and what sort of advice there will be is that, no, they will not be sued because the advice is of a generic nature. The typical thing that we will want to say—this is why I believe that the Government are being much too complacent about the risks—is, "Are you paying 17 per cent interest on your credit card bill each month, which you have not paid off? Are you having a choice between paying that, paying your mortgage and contributing to a pension?". Those sorts of questions are the ones that will focus people's minds.
	The work done by the DWP and the most recent projections of entitlement to income-related benefits still show a high number of people on pension credit, even under the present system: 40 per cent of people will still be on that means-tested pension credit in 2020, with 30 per cent in 2050. These projections show people who are at risk even if they have no debts at all—even if they are not paying high rates of interest on debt. Many people in the poorer target groups are badly stuck in debt. There are about 2 million people irreversibly stuck in debt in this country and that figure is going up rapidly.
	We do not propose to press this amendment to a vote today, but I look forward—particularly after we have heard the Minister's reply—to constructive discussions and to seeing whether we can bring forward an amendment that works at Report.
	We believe that there should be a national network. We would probably prefer to have it based on the citizens advice bureaux, but we are not prescribing that. We are saying that the network needs to be a trusted brand and that it needs to be financed by the Government. There is such an enormous expansion of the many millions of people who are the least sophisticated financially in our society that it is unthinkable that we should pass this Bill while leaving this issue on a wing and a prayer, hoping that Thoresen's work, or other things, may emerge later. There will be web-based or telephone services with no guarantee of face-to-face advice for the people who need it the most. I very much welcome the support from many parts of the Committee and hope that we can get to a more workable and generally agreeable amendment at Report.

Lord McKenzie of Luton: This has been an interesting and informed debate on an important subject. I am pleased that the noble Baroness is not going to press the amendment and that it is only by way of getting that discussion under way, because we could not accept it in the form that it comes before us.
	The amendment would prevent the automatic enrolment of jobholders who have reached the age of 50, unless they had been offered the provision of face-to-face pensions and debt advice. It is very specific and prescriptive. Employers will be required automatically to enrol jobholders between the age of 22 and state pension age. Clearly, it is important that jobholders of all ages, including the over-50s, are properly informed about the impact of workplace pension saving. We shall be working with stakeholders to ensure that suitable information is available at the right time.
	I do not agree that one-to-one advice will inevitably be needed by such jobholders—or, indeed, by every jobholder. The decision to remain enrolled will be straightforward for most people, including older groups. The matching contribution through the employer contribution and tax relief provides a good incentive to save. My noble friend Lady Hollis referred to the English longitudinal study of ageing and two of the examples that flowed from it. I shall not repeat them, but they are two examples of people over 50 for whom there was a clear benefit in enrolment and saving. But we are clear that good information is important and Clause 9 recognises that individuals will need access to relevant and accurate information about auto-enrolment.
	The DWP and other organisations, such as Citizens Advice and the Pensions Advisory Service, which we have heard about, and the Financial Services Authority, already provide information about pensions. A number of agencies and other organisations already provide access to debt advice, and Government already give grants to the National Debtline. We will ensure that every automatically enrolled individual has access to the range of information they need to understand the process of automatic enrolment, the pension scheme they will be enrolled into, their expectations for a state pension and the implications for their later life. Crucially, anyone who does not think that workplace pension saving is for them, regardless of the reason and regardless of their age, will be able to opt out.

Lord Oakeshott of Seagrove Bay: Of course nobody believes that inevitably everyone is going to need face-to-face advice, but does the Minister accept that there are individuals for whom face-to-face advice will be the only proper way? There may well be people who should be saving, but does he accept that there are a number of people for whom that will be the only way in which to give them satisfactory advice—yes or no?

Lord McKenzie of Luton: I am sure that it is the case that there will be individuals who need very specific advice, as I am sure that it is the case that there will be individuals for whom savings by pension arrangements are not appropriate. The challenge is to see the extent to which they can be identified. One problem with the amendment before us is that it assumes a broad category of people who are, en masse, in need of a certain service. I do not believe that the evidence supports that, which is why we are proceeding with the work programme, which I shall come to in a moment.
	The distinction between information and advice is an important one. As noble Lords will be aware, there is no legal requirement for individuals to receive one-to-one advice before they are automatically enrolled into an occupational pension scheme now. That is the current position. So giving those reaching age 50, or any jobholders, a new legal entitlement to one-to-one advice could give them a misleading impression that automatic enrolment is a risky and complex process. That could cause unnecessary worry and lead to opt-out by the very people who stand to gain from the employer contribution. Our reforms aim to overcome the inertia experienced by those who do not want to make what they consider complex decisions about saving. So we should avoid this at all costs.
	Of course, some individuals may have further questions and wish to seek guidance. That is the case for any financial decision. There are already free-of-charge, publicly funded services for pensions and debt guidance, locally and nationally—again, for example, through the Pensions Advisory Service, the CAB and the National Debtline. These services will continue to be part of the landscape in 2012, should people wish to seek guidance about whether a personal account, or indeed any pension, is right for them, and for those considering, say, paying off large, high-interest debts first.
	We are particularly pleased that Thoresen's proposed money guidance service will build on such existing provision. Thoresen has stated, and we agree with him, that auto-enrolment and personal accounts do not create a new need for a different kind of information and guidance for any groups.
	I do not agree that there is a need to supplement all this with additional one-to-one guidance services, potentially at great cost to the taxpayer. We simply run the risk of establishing new guidance services that will be used only by a minority of individuals. Therefore, rather than inserting inappropriate requirements into primary legislation, the Government will work with a range of other organisations that already provide information on retirement planning, to ensure people's information needs are identified and met.
	I pick up on a couple of specific points. There were issues around Thoresen's proposals. I believe that the proposals are an intelligent response to the need that he was asked to address; that is, the gap in general financial capability. However, it would be wrong for us to rely on the Thoresen pathfinders to deliver the information that people will need when they are auto-enrolled. The service is deliberately non-specific. It will aim to answer a wide range of basic financial inquiries, but will then pass people on to specialist organisations, such as the Pensions Advisory Service, for more complex queries.
	Given that we already know that a large number of people will need information to help them at the point of auto-enrolment, it would make no sense for us to wait until they contact a general financial inquiry service. We can and should anticipate most of the questions they will have and make sure that that information is available upfront. Many bodies are already providing this kind of information. We want to use their expertise to plan the provision of this information and to deliver it. We expect the final offer to be provided through a wide range of organisations and a variety of channels, including interactive bodies.
	The noble Lord, Lord Oakeshott, asked about the number of pensioners projected to be on benefits in the future. We should be very cautious about equating somebody who is destined to arrive on an income-related benefit as somebody who cannot benefit from saving though a pension arrangement. That is simply not the case. It may be the case for those who would have 100 per cent withdrawal for extra income. The majority of people heading for means-tested benefits would not be in that position. Of course, the pension reforms that we introduced last year, and which we are building on in this Bill, will restrict the impact of means-tested benefits in the future. But, as we discussed at Second Reading, if you want to eliminate means-tested benefits in total, you would have to more than double the state pension. I think the statistic is that if you double the state pension in 2012, by 2050, 25 per cent of pensioners will still be on at least one income-related benefit. So it is an environment in which we operate. To equate the two is, I believe, fundamentally wrong.

Lord Oakeshott of Seagrove Bay: That is not what anyone is saying and the Minister knows that perfectly well. The fact is that on the figures recently published by his department the proportion of pensioner households entitled to income-related benefit will be 55 per cent in 2020 and 40 per cent in 2050. The point is that a significant number of people in this group will be at risk and need advice. It does this Committee and this House no credit to pretend otherwise.

Baroness Hollis of Heigham: Perhaps my noble friend can help me on a somewhat different point, to which he also referred, about the interaction with IRBs. I cannot resist putting in a dig that the one thing you have to do is ensure that there is the full rate BSP if this is to work, otherwise there will be pound-for-pound deductions, not 40 per cent. What I wanted to push him on was the pathfinders, and perhaps he may care to write to us.
	I stand to be corrected, but my recollection is that there will be two pathfinders, both in the north, which will cover some 750,000 people, of whom 500,000 will be interactive and 250,000 face-to-face and telephone advice; but this will not go out until January 2009, it will take 12 months to collect the information and, I suspect, another six or nine months to analyse it. So we will reach 2012 before we have the proper loop back from the pathfinder proposals. I am relying on memory and I could be mistaken.
	First, can my noble friend confirm that those broad contours are correct and, secondly, if 250,000 of the 750,000 in the two northern pilots will have either face-to-face or telephone advice, what limits will he put on this? Will he target it, as the noble Baroness suggests? Will it be comprehensive? That is a huge enterprise and may be larger than the total population about which the noble Baroness is concerned.

Baroness Noakes: Regarding what the noble Baroness has just said, the pathfinders will not deal with auto-enrolment and will not encounter it, except in one or two isolated instances, in the whole of that period leading up to 2012. The pathfinders will offer no guidance on the operation of auto-enrolment post-2012. Thoresen himself said that what is being done following his report will not provide the kind of evidence needed; it might provide a generic framework, but it will provide no evidence on how successful that mode of delivering information and advice will be in the context of auto-enrolment.

Lord McKenzie of Luton: It is right that there are two pilots. I believe that my noble friend's description of the timeframe is right, but I would like to write to her with the detail on that. The Government are not saying that we are relying on the outcome of that to decide what we need to do. Clearly, what we know about that, as plans are developed, will input into that process.

Lord Skelmersdale: I do not think that I was asleep, but I did not understand: what process? The noble Lords said "that process".

Lord McKenzie of Luton: I shall try to be more expansive on that. A range of work is going on, including the workshop set in train by the department, which the noble Lord attended. It is an interesting process to try better to understand issues around savings incentives. It is hoped that there will be a report on that at the end of the year. Other work is going on; part of PADA's role will be to focus on the sort of information that job holders who will potentially be auto-enrolled will need. That is part of the process. There is ongoing engagement by the DWP with stakeholders who are involved in the workshops. So work is going on around this whole area better to understand savings incentives and related issues.
	None of that negates what we clearly know: that overwhelmingly it will be beneficial for people to save via pensions arrangements involving employer contributions, tax relief and give people a chance to build their replacement income when they retire. We know that already. We need to build on that with more information, but we have not identified particular groups or said that it will not be beneficial for people who fit certain characteristics to save.

Lord Kirkwood of Kirkhope: The noble Lord is making heavy weather of this and I do not think that he is winning. The benefit of my noble friend's amendment is that it is clearly focused. We know that there is the pay to save consultation, which is all welcome, although it is a bit disappointing that we will not see it before the proceedings on the Bill are finished. However, we will no doubt return to these arguments in the future. The Minister does not seem to accept that there are any at-risk groups; that is the message that he is sending to me. From where I am sitting, this is the most obvious at-risk group and, if the consultation is being conducted on the basis that the Government do not think that there are such groups, it is bound to fail.

Lord McKenzie of Luton: I am not saying that. Of course there will be people for whom it will not pay to save. The proposition is about trying to describe a group with broad characteristics about which you could say, "That group in aggregate is unlikely to benefit from saving with our pension scheme". However, we cannot have a broad-brush approach that people who reach the age of 50 are potentially in a group that may not benefit from saving, as there is no evidence for that. We need to do further work. The proposition that we must target this group with this particular service and that members of the group cannot be auto-enrolled before they have been offered it is not the right way to go.

Lord Oakeshott of Seagrove Bay: Either deliberately or accidentally the Minister does not understand the point. No one is saying that everyone is in this high-risk group, but the Pensions Policy Institute, which is easily the most respected body in the field, has identified people over 50 who are renting in old age as likely to be high risk. We are focusing on this group because there may be a significant number of people in the group for whom this may not pay, which is why they need advice. Some will and some will not need advice, but can the Minister not see that it pays to focus on the groups that are most at risk? He should try to address the point that is being made from all sides of the Committee.

Lord McKenzie of Luton: I note that the noble Lord referred to people who were likely to be a significant part of that group. We would need evidence for that. Clearly, there must be good-quality information to all jobholders, not just those who are aged 50 or over. The issue is what further needs to be provided. We believe that the right approach is to ensure that broader advice is available, covering debt, pensions and financial issues generally. Part of the information flows might signpost people to that extra provision of advice, but we do not think that making that broader provision around financial capability and specific groups a precursor to being able to auto-enrol is the right way to go. Of course there must be good-quality, relevant information for everyone, to inform them and help them to understand the proposition—the benefits and risks—of auto-enrolment. When one strays into the issue of advice, however, one should recognise that it should be made available by the group of stakeholders of organisations that do a brilliant job at the moment in supporting people. That should be the proposition. To tie it up in the way proposed by the amendment is not the right way to go.

Baroness Thomas of Winchester: I am grateful to all noble Lords who have spoken in the debate. I was going to say "short" debate, but it has taken three-quarters of an hour, which shows how important it is.
	The Minister threw in quite a few red herrings. We are talking not about auto-enrolment but about a specific group of people—probably mostly women over 50 on low earnings. They are not the sort of people who read the financial pages of the papers and know automatically what to think about auto-enrolment. They are what the noble Lord's department called the hardest-to-reach groups. We think that the Bill gives us a duty—not just a chance—to include this provision. Everyone should have generic financial advice if they need it and it is good that many people now provide it. However, we have a chance in the Bill to do something; we cannot do anything about it just out of the blue.
	What will employers be told about auto-enrolment when all the information comes to them? Will the Minister say whether they will get information such as, "If there are people over 50 in your workforce, you must tell them that if they receive means-tested benefits it may not suit them to auto-enrol"? Will that be in the information pack that is sent to employers? We are in the dark about the advice that they will get. We will certainly return to this issue on Report. We may not have the wording absolutely right but we will have another go at it, as we need to tease out further what we can do on this issue. Does the Minister want to come in on what I have just said?

Lord McKenzie of Luton: I just want to refer to the role of the employer and the information that he makes available. This is all part of what is being developed in conjunction with PADA. We do not envisage that the employer will be engaged in giving advice. We want to make things as efficient and as least costly as possible for employers. That is part of how we will construct the information that should be made available to jobholders.

Baroness Thomas of Winchester: If there is no duty on employers, an employee can be left absolutely in the dark. We must come back to this matter on Report. I am sure that it is not beyond the wit of all those groups that were mentioned to have some sort of system of advice. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McKenzie of Luton: moved Amendment No. 10:
	Clause 3, page 2, line 28, leave out subsection (5) and insert—
	"(5A) For the purposes of arrangements under subsection (2) regulations may require information to be provided to any person by the employer or—
	(a) where the arrangements relate to an occupational pension scheme, the trustees or managers of the scheme; (b) where the arrangements relate to a personal pension scheme, the provider of the scheme.
	(5B) For the purposes of arrangements made under subsection (2) in relation to a personal pension scheme, regulations may deem an agreement to exist (subject to section 7) between the jobholder and the provider of the scheme for the jobholder to be an active member of the scheme on terms and conditions determined in accordance with the regulations."

Lord McKenzie of Luton: I shall also speak to the other amendments in the group. Workplace personal pensions are an important and growing part of the pensions market. Membership of workplace personal pensions is around 47 per cent of current private sector pension membership, which represents about 3.3 million employees, involving total contributions of £6.7 billion a year. There are 2.1 million members of WPPs with an employer contribution of 3 per cent or more.
	We have always intended to include workplace personal pensions within the scope of this legislation but we were concerned that these schemes could fall under the scope of the directives on distance marketing and unfair commercial practices. We are now content that, under the specific provisions of the employer duty, automatic enrolment into workplace personal pensions is not within the scope of these directives. The European Commission has confirmed that it shares our view. This group of amendments reflects that positive outcome.
	Amendment No. 10 to Clause 3 will permit qualifying workplace personal pensions to be used for automatic enrolment. That is achieved by enabling the deeming of an agreement for scheme membership between the jobholder and the provider. This agreement will be based on the provision of information to the jobholder as to the terms and conditions of the scheme that they are joining. The details of the information to be provided will be laid out in regulations. The amendment also takes a new power to ensure that, to support the automatic enrolment process, information relating to the scheme that a jobholder is being enrolled into is provided to any relevant persons.
	Of course, we no longer need the power to exempt workplace personal pensions from the requirement to automatically enrol. Amendment No. 10, therefore, also removes the power for an exemption. Amendment No. 12 to Clause 4 is a consequential amendment, removing a further reference to the power for an exemption. Together with stakeholders, we have worked hard over the past 12 months to consider how workplace personal pensions are treated under these reforms. This decision ensures both that the integrity of the reforms is maintained and that the insurance industry can continue to operate on a level playing field.
	Amendments Nos. 18 and 23 to Clauses 5 and 6 respectively mirror the new provision in Clause 3 for the cases of automatic re-enrolment and the jobholder's right to opt in. Alongside these changes, Amendment No. 54 is a crucial amendment that extends the remit of Clause 16 to allow qualifying workplace personal pensions to be used as automatic enrolment schemes. Amendment No. 55 to Clause 16 is a minor technical amendment to tidy up the drafting of the Bill.
	The remaining amendments in this group are all concerned with ensuring that the Bill accurately reflects our new position regarding WPPs and automatic enrolment. I shall explain each briefly. Amendment No. 37 to Clause 8 makes a cosmetic adjustment to the Bill so that there is no longer a distinction between occupational and personal pension schemes for workers without qualifying earnings. Amendment No. 86 extends the remit of the power in Clause 29 to personal pension schemes, to enable employers to deduct pension contributions from the pay of an individual who has been automatically enrolled into a personal pension. Amendment No. 87 makes it clear that this power is not necessary for workers without qualifying earnings who request to be enrolled into a personal pension scheme, as direct payment arrangements for this situation are covered under Section 111A of the Pension Schemes Act 1993, as described in Clause 8(7)(c). Clause 29 also contains the consequential Amendment No. 88, which makes it explicit that, following on from Amendment No. 86, contributions can be paid to the provider of a personal pension scheme as well as the trustees or manager of an occupational pension scheme.
	Finally, Amendment No. 105 removes from Clause 49 further references to the power to regulate for an exemption from automatic enrolment for personal pensions. This clause will therefore apply to employers equally, irrespective of whether the qualifying scheme that they provide for their workers is an occupational or personal pension scheme. I beg to move.

Lord Skelmersdale: There was a lot of discussion on this subject in another place, where the Government committed themselves to going to Brussels to sort out the exact meaning of the distance marketing directive. Being of a suspicious nature, I wonder what the Government wanted the result to be. Is it the result that we have here, which ensures that workplace pensions can be used to discharge the duty on employers to operate an automatic enrolment scheme? In his speech, the Minister referred to "enabling" them so to do. Alternatively, did the Government in their heart of hearts hope that they would get approval for compulsion? It is important that we know this, because I have been asked the question in several letters from employers and occupational pension schemes. I would like to know the answer.

Lord Oakeshott of Seagrove Bay: After the Sturm und Drang of the last debate, we seem to be back in the calmer waters of government amendments. As the noble Lord said, serious concerns were expressed in another place and by the insurance industry about these matters. We are pleased that the issue has been properly resolved. I am afraid that I am not suspicious—unless the Minister says something that makes me change my mind.

Lord Kirkwood of Kirkhope: My noble friend has made the point for me, but I would like the Minister to clarify something that might be obvious to everyone but me. This is not just about personal accounts. The ruling will provide a completely different set of conditions for the whole of the workplace savings movement. I would like to hear how the Government are addressing how that will change things in terms of compliance, regulation and other matters. This could be a big change in the way in which workplace savings and pensions are provided in future and it could affect much more than the personal accounts that we will be discussing later in the Bill.

Lord McKenzie of Luton: Perhaps we should start with the concept of the Government having a "heart of hearts". I reassure noble Lords that workplace personal pensions are an important and growing part of the pensions market and that where we have ended up on the issue is exactly where we wanted to be—ensuring that there can be auto-enrolment into this range of provision, just as we provide for auto-enrolment into other occupational schemes and, indeed, personal accounts. That is an important outcome.
	The noble Lord, Lord Kirkwood, asked what this means more generally. We should be clear that what has been accepted is driven by the fact that there is an employment nexus to these arrangements. It is the employer duty that has enabled this to happen. If you consider how the directives might have operated otherwise, you see that it would be a business-consumer issue, which is why the directives are there. The employment nexus is important. It will operate from 2012, when the employer duty and its consequences take effect. I am grateful for the support of noble Lords.

On Question, amendment agreed to.
	Clause 3, as amended, agreed to.

Baroness Noakes: moved Amendment No. 11:
	After Clause 3, insert the following new Clause—
	"Tax effect of automatic enrolment
	(1) The Secretary of State shall ensure that every jobholder who—
	(a) becomes an active member of an automatic enrolment scheme under section 3, and(b) has not opted out under section 7,
	receives value equivalent to the contributions made by him multiplied by the basic rate of tax applicable at the time of the payment of the contributions.
	(2) The value referred to in subsection (1) shall be delivered in accordance with regulations made by the Secretary of State and may include—
	(a) tax relief to the jobholder if that jobholder would otherwise pay tax at the basic rate an amount of income equivalent to the amount of his contributions, and(b) direct payment by Her Majesty's Commissioners of Revenue and Customs to the relevant automatic enrolment scheme."

Baroness Noakes: Amendment No. 11 introduces a new clause after Clause 3. This is a probing amendment designed to allow the Minister to explain how the tax contribution to automatic enrolment schemes will work. The Minister will be aware that I trailed at Second Reading the fact that I had had initial discussions with his officials and that I would use our Committee stage to explore this further.
	I believe that the tax aspects of the Government's pension proposals have received little attention, but they are potentially important. My amendment refers to automatic enrolment, which will cover all jobholders. My concerns arose initially from personal accounts, but it is illogical to focus on personal accounts when automatic enrolment into workplace pensions may be at least as important an aspect of the provision of pensions.
	I take the Committee back to the Government's White Paper in May 2006, Security in Retirement: Towards a New Pensions System. In paragraph 36 of the executive summary, under the heading A New Pensions Settlement: Our Proposals for Reform, the Government's proposals were described as follows:
	"The scheme will have the following key features:
	Employees will contribute 4 per cent ... Employers will make minimum matching contributions of 3 per cent ... A further 1 per cent will be contributed in the form of normal tax relief".
	A footnote said that this 1 per cent,
	"represents basic rate tax relief on individuals' contributions".
	I think that we all bought the arithmetic of personal accounts as four plus three plus one.
	The December 2006 White Paper, Personal Accounts: ANew Way to Save, said, in paragraph 63, that,
	"employees will pay contributions of around 4 per cent ... the employee contribution will be matched by 3 per cent from the employer together with around 1 per cent in the form of normal tax relief from the State".
	When we come to the Bill, the 1 per cent contribution has disappeared. Instead, Clause 19, which deals with money purchase schemes, and Clause 25, which concerns personal pension schemes, refer to a total of 8 per cent, with the employer's portion being at least 3 per cent. There is no mention of tax and so the employee's portion is 5 per cent.
	Tax can be an important element of the economics of pensions saving, and it is particularly important at the lower end of the income spectrum, where the advantages of saving may be less pronounced due to the impact on, inter alia, means-tested benefits, which we discussed earlier. In some cases, the tax element can produce virtually the whole benefit of saving.
	It seems that the Government expect the tax element to be delivered not to the personal accounts scheme or other automatic enrolment scheme but to the individual via the PAYE system. That may be fine for a lot of people but it will not work for all. The threshold for the start of automatic enrolment is set at £5,035 in the Bill and we expect it to be uprated to match the primary threshold for national insurance purposes, which, in turn, is normally expected to be the same as the personal allowance for tax purposes. However, we have recently found that the Government—for political reasons, which I need not rehearse today—have chosen to increase the personal allowance this year by £600.
	Let us assume that the bottom level is set for the purposes of auto-enrolment at this year's primary threshold of £5,435. However, once the Finance Bill is enacted, the personal allowance for tax purposes for this year will be £6,035. If I earn £6,000 a year—which is approximately 21 hours a week at the minimum wage—auto-enrolment will take £48 from me but, being below the basic rate threshold, I will get no tax relief; I will pay the whole 5 per cent on the relevant portion of my earnings. There will be similar results if I have tax reliefs in excess of the basic rate, the obvious ones here being the blind person's allowance, which is £1,800, or one of the age allowances, which are worth more than £3,500.
	Another problem area would be people working for part of the tax year. Tax allowances are available for the whole year and not for the parts of the year that are worked. If I earned at an annual rate of, say, £12,000 and started work half way through the tax year, or stopped working half way through the year, my earnings for the year would be £6,000 and, if it were this year, I would pay no tax. However, under the auto-enrolment pay reference period rules, I would expect to pay pension contributions based on a little under £3,500 because I would get a proportion of the first threshold knocked off before triggering auto-enrolment contributions. Therefore, I would probably have to pay something in the region of £174 in pension contributions but would get no tax relief because I would not be paying any tax.
	Similarly, if I earned at an annual rate of £24,000 a year and worked for only three months in the year, I would pay no tax and would therefore get no tax relief, but a little under £240 would be taken from me in contributions or through the auto-enrolment method, for which I would get no relief. I do not know how many people would be affected by this but they would be mainly those who earn around the thresholds, and that inevitably means those who earn the least, which probably involves women.
	The Turner report, or Pensions Commission report, recommended in section 9(i) of its executive summary that,
	"the option of creating a scheme specific tax relief regime ... based on a single rate of tax relief and a matching up-front contribution approach, should be considered in detail. And we believe that, whether or not a scheme specific regime is created, the tax treatment of NPSS"—
	that is, personal accounts in today's language—
	"contributions should mirror the attractive features which currently apply to saving via a Stakeholder Pension, i.e. the fact that starting-rate and non-taxpayers, many of whom will be part-time employees, can receive tax relief at the basic rate"."
	I could not find any reference in the Government's White Papers to the detailed consideration recommended by the Turner report, and there is certainly no mention of the stakeholder method of delivering relief directly to personal accounts or to the pension scheme. My amendment seeks to ensure either that the employee gets basic rate tax relief on his contributions or that an equivalent amount is paid to the pension scheme. The latter is meant to mirror the stakeholder arrangement.
	I do not pretend that the amendment is perfect, and I have already said that it is probing for the purposes of today's debate, but I hope that it will enable the Minister to respond to the issues in a positive way. I beg to move.

Lord Lyell: I was alerted to this amendment when I looked through the Marshalled List earlier today. I was certainly interested in the tax aspects and the balance of tax, as has been explained quite beautifully. Indeed, in all my years in your Lordships' House, the past seven minutes have been some of the most rewarding and instructive. My noble friend has a point, and she and your Lordships will know that she is opposing a very highly qualified member of the profession. I am a member of the Scottish profession and our great motto is "Seek the truth". We have certainly found that this afternoon from my noble friend.
	It seems to me that there is a considerable problem here, particularly in that people might have a higher income. Indeed, my noble friend said that it depends on how long people work for during a year. Further on in the legislation, we shall find reference to share fishermen and people working on trawlers and so on. They have somewhat irregular periods of work during the year, let alone the tax year, so if the Minister could look at that, I should be very grateful. I am certainly immensely grateful to my noble friend for giving me a free two-minute lesson. I hope that the Minister can see his way to giving a supportive and helpful reply today or even at a later stage.

Lord Oakeshott of Seagrove Bay: The noble Baroness raised some very pertinent points. This is probably the occasion in my life when I have felt most at sea through not being an accountant, and I look forward very much to hearing another excellent account in the Minister's reply.

Lord McKenzie of Luton: I am grateful to the noble Baroness for raising this important point. It has prompted us to reflect on where we are. As she said, tax relief on pension savings adds to, and plays an important part in, the overall incentive to save. Individuals who save at the new minimum level will see contributions worth 8 per cent of banded earnings going into pension saving. Of these, 3 per cent will come from the employer, 4 per cent from the jobholder and 1 per cent from the state for basic rate tax payers. That is absolutely right.
	All UK qualifying schemes will be required to be tax-registered to ensure that their members receive tax relief on their contributions and investment returns. Even non-taxpayers can get tax relief on pension contributions. Individuals may save up to £2,880 in any one tax year and the Government will top that up with another £720, giving total pension savings with tax relief of £3,600 per year. Coincidentally, that is the same as the cap on personal accounts, but it is just a coincidence.
	An older person aged 65 to 74—obviously one will not automatically enrol people past the age of 65—who had an income just below their personal tax threshold, which is currently £9,030, and who saved at the forthcoming default rate, would receive total pension contributions of around £320 a year, comprising their own, those from their employer and tax relief. That is £9,030 minus the £5,035, so it is 8 per cent on £4,000. Of that £320, around £40 would be provided by the state in the form of tax relief, which is well within the annual savings limit for non-taxpayers.
	As registered pension schemes for tax purposes, employer-sponsored automatic enrolment schemes may choose—this is important—whether to operate net pay or relief at source as the method for giving relief on the members' contributions of their workers. However, they must operate the same arrangements for all worker members. A registered pension scheme would not be able both to operate relief at source and to accept contributions under net pay for worker members.
	That restriction recognises that operating both regimes would be complicated for employers, schemes and HMRC to administer, especially as the interaction between workers' income and personal tax allowances could mean that the most appropriate way of giving relief could be difficult to determine or even change during the course of a financial year.
	I say to the noble Baroness that we do not need to take a decision at this point about the method the personal accounts scheme will use to deliver tax relief to its members. More analysis and thinking time is needed. It would be helpful to see the shape of the underlying tax landscape closer to 2012, as that may influence the decision. In addition, the Personal Accounts Delivery Authority will want to work with its employers' and members' panels to help establish the most appropriate arrangement for its target group of members, and for the employers who contract with the scheme.
	To reiterate, for those employers who operate the relief at source approach, there should be no difficulties for anyone, even if they are not subject to income tax in any particular year, because the £3,600 limit should enable them to get their relief.
	A couple of other points were raised. The noble Lord, Lord Lyell, asked about share fishermen. They are not jobholders for the purpose of the legislation, so they do not fall within the arrangements. The noble Baroness said that she presumed that the bands would increase by prices.

Baroness Noakes: The Minister will have plenty of time on later amendments to debate how the bands will be uprated, so we can probably skip that point for now.

Lord McKenzie of Luton: I am happy to do that. I was just going to emphasise that the objective is that they should increase by earnings. On the starting point of £5,035 and where the personal allowance currently sits, we are some way away from 2012 and the £5,035 threshold will be operated by earnings. The personal allowance depends, as ever, on what the Chancellor determines; we will know in due course; but historically, under Rooker-Wise, it has been increased by prices, so there will be some convergence.
	I hope that that has given the noble Baroness a degree of comfort on the valid and important point that she raised. There is more work to do to see which is the best route to achieve tax relief. I understand that it is a probing amendment, but we want to avoid a heavy additional mechanism that HMRC would have to engage in, because that could be costly and difficult. It would almost require year-end reconciliations to deliver on it rather than rely on the current arrangements through the relief-at-source mechanisms or the net pay arrangements. That is an ongoing issue on which we need to do further work.

Baroness Noakes: I thank the Minister for that careful reply and other noble Lords for taking part in the debate. I think that his response can be summed up as, "Trust me—I am a Minister".

Lord Tunnicliffe: Very reasonable.

Baroness Noakes: Perhaps very reasonable, as the Minister's noble friend suggests.
	I will consider carefully what the Minister has said when I have read it in Hansard, but it seems to me that there is still ambiguity about whether and to what extent tax relief will be delivered for those who contribute and that that is therefore not an entirely satisfactory response. That is my initial response. It is important to be able to button this down because, as I said earlier and as I think that the Minister accepts, for some people who will be contributing to personal accounts by auto-enrolment, the tax relief element of the four plus three plus one is critical to whether it pays to save. That is how the whole scheme was sold and that is why it is important to have clarity about it. I will consider what the Minister has said today and, if necessary, will return to this again on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 4 [Postponement of automatic enrolment]:

Lord McKenzie of Luton: moved Amendments Nos. 12 to 14:
	Clause 4, page 2, line 41, leave out "or with regulations under section 3(5)"
	Clause 4, page 3, line 5, leave out from "which" to end of line 6 and insert "within the minimum period—
	(a) the person ceases to be an active member of the scheme, or(b) the scheme ceases to be a scheme of the relevant kind."
	Clause 4, page 3, line 8, at end insert—
	"( ) A scheme to which arrangements of a description prescribed under subsection (1) relate is a scheme of the relevant kind if, to fall within that description, arrangements must be made in relation to a scheme of that kind."
	On Question, amendments agreed to.
	On Question, Whether Clause 4, as amended, shall stand part of the Bill?

Lord Skelmersdale: Despite the debate in Commons Committee on 22 January, reporter at cols. 174-9, where Members of that Committee were told that companies such as Tesco needed time to adjust their existing schemes to qualifying requirements, I simply do not understand the need for Clause 4. It depends totally on the timing. The Bill allows the Secretary of State to delay regulations in all sorts of areas. On many occasions, we know, because the Minister has as good as confirmed it several times, that the Government are waiting for PADA to, if I am putting it nicely, advise them; if I am putting it nastily, tell them what to do.
	What we do not know is how quick off the mark these regulations will be. If they are announced, say, a year in advance, that will be plenty of time for organisations such as Tesco to change their scheme into a qualifying scheme. However, if the regulations are to be laid at the last minute, I suppose that there is a need for a clause such as this. After all, the clause permits the Secretary of State to lay an order postponing auto-enrolment, because the normal arrangement is that a worker is to be in the scheme from his first day at work. In the event of a comparatively early laying of the regulations, I cannot envisage any circumstances when the clause may be used.
	Secondly, subsection (2), which describes the minimum period in which a jobholder may not leave a scheme, is also very curious. The Explanatory Notes state:
	"Employers that are permitted to delay automatic enrolment may be required to ensure that members remain in such a scheme for a prescribed period of time, unless the jobholder leaves that employment or chooses to leave the scheme".
	I do not understand the word "ensure". Does that really mean that a jobholder will be forced to remain in a scheme that may not be a qualifying scheme at the end of the day? Given that Clause 4 is entitled "Postponement of automatic enrolment", why cannot the employee choose to leave the scheme, as he can under normal auto-enrolment rules? Yet again, I am confused, and it would be helpful to hear the Minister's explanation. I beg to move.

Lord McKenzie of Luton: I thank the noble Lord for the opportunity to put clearly on the record what the clause is about. It provides a regulation-making power to delay automatic enrolment for any or all employers, schemes or jobholders. We intend to use the regulations to establish a deferral of automatic enrolment for a short period—most likely, for three months—for employers who offer high-quality provision. To minimise risks of discrimination, we plan to require employers to keep the jobholder in a higher level scheme for a minimum period so that they can make up for any savings foregone during the delay.
	Three technical government amendments to Clause 4 have been made, which are grouped with amendments to other clauses that have been discussed—Clauses 2 and 3. The Committee will be aware that those amendments work in conjunction with Clauses 2, 3 and 5. However, I am happy to discuss the policy intention behind Clause 4 more generally at this point.
	Our general approach is for immediate enrolment so that people who change jobs frequently, together with casual and seasonal workers, have the best possible access to pension saving and the prospect of building a sufficient pension pot. However, we recognise that some employers voluntarily pay higher contributions, or provide defined benefit schemes and that in the longer term this benefits their workers. In order to encourage such employers to maintain their generous offers, once automatic enrolment is introduced, we intend to allow them to defer automatic enrolment by a short period. That is why it is crucial to have the power to permit this under the legislation.
	It would not be appropriate to allow all employers to delay automatic enrolment. Analysis suggests that people, on average, change jobs eight times during their working life. Enabling all employers to delay automatic enrolment for three months, for example, could reduce the fund of an individual in a minimum-level qualifying scheme who moved jobs eight times in their working life by as much as 5 per cent. This clause will enable us to set out arrangements for employers to make use of a deferral period, including the length of any period and the level of contributions required. The deferral period is a measure to support employers in maintaining higher-value provision. Using regulations will enable us to review arrangements to ensure that the approach is succeeding in supporting higher-level pension provision for both employers and workers.
	The clause also stipulates that, in order to ensure that members who are automatically enrolled later benefit from generous provision, employers must maintain membership in the scheme for a minimum period. This protection is crucial because people need to catch up foregone savings that they would have received if they had been automatically enrolled into a scheme with minimum contributions from the outset. Our intention is that the minimum level of employer contribution to allow employers to postpone will be 6 per cent of qualifying earnings, that is double the minimum. On that basis, we expect that employers offering these higher contributions or qualifying defined benefit schemes would be able to postpone automatic enrolment for about three months. However, we propose that the level of contributions, the length of the postponement period and the length of the catch-up period is agreed in secondary legislation, as this gives us the opportunity to continue to consult ahead of laying regulations.
	There is a relationship between the length of the postponement period—the catch-up period—and the level of contributions required. If we were to fix some conditions for postponing automatic enrolment in the Bill we would restrict the flexibility to tailor the arrangements to meet the dual needs of both jobholders and employers in the future. I hope that has clarified matters for the noble Lord. It is a way of supporting existing good quality provision. That is the purpose of the clause.

Lord Skelmersdale: I understand this and it would be. I pick up, from what the Minister has just said, that this is not a transitional clause, but is intended to operate over quite a period of time—otherwise there would be no need to change the regulations, as the Minister has said. I will have to look extremely carefully at what he has said to see that I have understood him correctly. In the mean time, I do not propose to pursue this objection tonight.

Clause 4, as amended, agreed to.
	Clause 5 [Automatic re-enrolment]:

Lord McKenzie of Luton: moved Amendment No. 15:
	Clause 5, page 3, line 21, after "jobholder" insert "—
	(a) "

Lord McKenzie of Luton: I shall speak also to the other amendments in this group. Clause 5 provides a power to require employers periodically to re-enrol jobholders who are not currently participating in qualifying workplace pension saving. To a large extent, re-enrolment will mirror the auto-enrolment process set out in Clause 3. Automatic enrolment is widely recognised as one of the best ways to overcome the decision-making inertia which continues to deter many people from saving for a pension. Nevertheless, some people will still opt out of workplace pension saving. Others will stop saving after a period of participation. In many cases, this will be an informed decision and perfectly reasonable in the light of that jobholder's circumstances. However, circumstances can change. We consider re-enrolment to be an important provision because we do not want job changes to be the only event that prompts a jobholder to consider whether to start or re-start pension saving.
	A timely reminder through re-enrolment would make all the difference to the standard of living a jobholder is eventually able to afford in retirement. Government Amendments Nos. 15 and 16 clarify that re-enrolment will not apply if a jobholder has stopped saving or opted out under Clause 7 within a prescribed period before re-enrolment is due. We do not want employers to have to enrol workers who have recently decided to opt out and neither will those workers want to have to opt out again. It is also with employer burdens in mind that we decided re-enrolment should not happen more than once every three years. While the details of the timing of re-enrolment will be laid out in regulations, Amendment No. 21 specifies that these regulations must ensure that there is not more than one re-enrolment date within 3 years, whether the date is linked to a jobholder event or an employer event.
	There are, however, circumstances where this blanket three-year exclusion will not be appropriate and where we do not think it will be sufficient to depend on a jobholder proactively opting in. Amendment No. 21 provides a short list of special circumstances where it will be necessary for employers to re-enrol jobholders more frequently than the stipulation of three years. The actual timing of re-enrolment in these circumstances will also be set out in regulations. The amendment of the noble Lord, Lord Skelmersdale, seeks to remove the power to make regulations relating to the timing of re-enrolment. I fully understand that the process of re-enrolment is a subject of much interest. This is an important matter and we need to strike the right balance between the benefits for jobholders and the impact on employers.
	We intend to discuss with stakeholders how best to introduce this policy, so that it minimises the burden on employers and schemes while ensuring individuals are prompted to reconsider workplace pension saving from time to time. As part of our continued stakeholder engagement, we aim to set out our plans in the autumn before going on to publish draft regulations in spring 2009. I hope that I have given noble Lords reassurance on this issue and I beg to move.

Lord Skelmersdale: My amendment to line 28, leaving out subsection (6), has been grouped with this amendment for perfectly good reasons. That amendment was originally intended to be a probing amendment to confirm that the Government intended automatic re-enrolment to occur only every three years and to get this period onto the Bill in due course. I am, therefore, very glad that the Government has more or less done this job for me in their Amendment No. 21. Their new clause, "Timing of automatic re-enrolment", clarifies this by doing just that. I also note that this group of amendments, as the Minister said, clarifies the re-enrolment process in Clause 5—but why three years in the first place? It would obviously be too expensive and might even encourage workers to opt out if it was to take place in a period of less than three years, but why three years and not, say, five years. There must be a perfectly good reason, but what is it?
	There are yet other questions around the information that must be provided. Government Amendment No. 18 refers here to automatic re-enrolment, which I hope the Minister will answer. I am beginning to understand what information will need to be provided to jobholders on their original auto-enrolment, whether into a qualifying scheme or into personal accounts. However, what sort of information are the Government thinking of? If the information is too much, it must have the danger of encouraging opt-out, which is against everybody's interests. If on the other hand it is not very much, what value will it have? After all, we are talking not entirely but mostly about people who have already been in the scheme for at least one period of three years, then opted out and are considering rejoining. I hope that most of them will have been perfectly happy with the way in which it went for them when they were auto-enrolled. The last thing we want is for them to be put off in any way.
	How much information will the Government require to be sent out? Furthermore, I see from Amendment No. 18 that it is the employer who is responsible for making sure that the information reaches his employee. The latter, then, is a postbox. It is clear that the information originates with the trustee, manager or provider responsible for the scheme in question when it is a qualifying scheme. However, when it is a personal accounts scheme, will the trustees send the information to the employer for onward transmission to the employee? If not, who will?

Lord Kirkwood of Kirkhope: I said earlier—I believe it to be true—that auto-enrolment is crucial to the success of the policy. It is one of the two things that the noble Lord, Lord Turner, insisted on getting right for the whole basis of the reform to succeed. I want to do everything within reason to get people enrolled, re-enrolled and re-enrolled again if necessary. Obviously there is a balance to be struck, with the employer—not the trustee, although the noble Lord, Lord Skelmersdale, raised a good question in that direction—active from day one in enrolling and re-enrolling people. It should get the support of the Government to make that a consistent part of the policy as it unfolds.
	We have seen the worrying experience in New Zealand. Of course the policies are not in parallel exactly because the rules and the scale are different, but we now learn that the KiwiSaver scheme is approaching a 30 per cent opt-out level, after some years. That is a real worry. A lot of effort is necessary on the part of all the stakeholders, the Government and the employers to make sure that everyone who can be captured sensibly in the personal accounts should be so captured. Therefore, there is a role for the Government to support employers as much as they can.
	I do not know why three years is the given figure either. It is a good question. I want as short a period as possible, to ensure that the vast majority of people for whom the arrangements are appropriate are captured in the scheme. If not, we will go the way of New Zealand and haemorrhage participants. That would not be in the long-term interests of the policy.

Lord McKenzie of Luton: I very much agree with the noble Lord, Lord Kirkwood, about the importance of enrolment, auto-enrolment and re-enrolment. That is key to the proposals. Both noble Lords asked why the period was three years. We asked stakeholders about the period for re-enrolment in the 2006 White Paper and, of the 22 respondents, the majority were in favour of three years. However, three years is only the minimum. It will be a matter for regulations in due course, but that is where we are and it cannot be more frequently than three years. I acknowledge that there is a balance to be struck. We are talking about enrolment or re-enrolment not just into personal accounts, but into the whole panoply of qualifying occupational provision.
	The noble Lord, Lord Skelmersdale, asked me about the provision of information. Amendment No. 10, to Clause 3, will permit qualifying workplace personal pensions to be used for automatic enrolment. Sorry—that does not deal with his point. He asked generally about what sort of information needed to be provided. Clause 9 talks about the information to be provided to jobholders, and clearly there are existing provisions relating to the requirements on pension providers to provide members of the schemes with routine information. The amendment—it mirrors earlier ones—recognises that information will have to flow to various people. It will have to flow from the employer to the employee in terms of the scheme with which the individual is involved. There will have to be some communication about the deductions process from earnings, and there will need to be communication from the employer and the scheme about who has been enrolled. It is on those sorts of issues that we are talking about an information flow; I do not think that there is anything more profound or sinister about it, but I might recap on my briefings and write to him if there is anything further with which I can reassure him on that point.

Lord Skelmersdale: I am grateful. For once I was not suggesting that there was anything sinister here, although I suggested a sinister intention earlier this afternoon. I was trying to get at the fact that the employer could be the originator of the information given to the employee in certain circumstances, but that in other circumstances there would be other instigators and the employer would be what I described as a postbox. I hope that that reaffirmation of what I said will help the Minister when he comes to produce one of his welcome letters.

Lord McKenzie of Luton: I confirm that the employer will be the instigator of some information—it will have to be, because it will be its decision into which scheme the individual will be auto-enrolled. The information on that choice will certainly have to be communicated.

On Question, amendment agreed to.

Lord McKenzie of Luton: moved Amendments Nos. 16 to 18:
	Clause 5, page 3, line 22, at end insert ", or
	(b) gave notice under section 7."
	Clause 5, page 3, line 22, at end insert—
	"( ) Subsection (2) is subject to section (Timing of automatic re-enrolment)(6)."
	Clause 5, page 3, line 23, leave out subsection (5) and insert—
	"(5A) For the purposes of arrangements under subsection (2) regulations may require information to be provided to any person by the employer or—
	(a) where the arrangements relate to an occupational pension scheme, the trustees or managers of the scheme; (b) where the arrangements relate to a personal pension scheme, the provider of the scheme.
	(5B) For the purposes of arrangements made under subsection (2) in relation to a personal pension scheme, regulations may deem an agreement to exist (subject to section 7) between the jobholder and the provider of the scheme for the jobholder to be an active member of the scheme on terms and conditions determined in accordance with the regulations."
	On Question, amendments agreed to.
	[Amendment No. 19 not moved.]

Lord McKenzie of Luton: moved Amendment No. 20:
	Clause 5, page 3, line 29, leave out from "regulations" to end of line 33
	On Question, amendment agreed to.
	Clause 5, as amended, agreed to.

Lord McKenzie of Luton: moved Amendment No. 21:
	After Clause 5, insert the following new Clause—
	"Timing of automatic re-enrolment
	(1) Regulations under section 5(6) must either—
	(a) secure that for any jobholder there is no automatic re-enrolment date less than three years after the jobholder's automatic enrolment date, and that there is not more than one automatic re-enrolment date in any period of three years, or(b) secure that for any employer there is not more than one automatic re-enrolment date in any period of three years.
	(2) Subsection (1) does not restrict the provision that regulations may make about the timing of a jobholder's automatic re-enrolment date ("the relevant date") in the following cases.
	(3) The first case is where the jobholder became an active member of a scheme in accordance with regulations under section 4 and—
	(a) at any time before the end of the minimum period under that section, the jobholder ceases to be an active member of the scheme or the scheme ceases to be a scheme of the relevant kind for the purposes of that section,(b) that event is not the effect of any action or omission by the jobholder or the employer, and(c) the relevant date is the jobholder's first automatic re-enrolment date after that time.
	(4) The second case is where—
	(a) at any time after the jobholder's automatic enrolment date, the jobholder ceases to be an active member of a qualifying scheme or a qualifying scheme of which the jobholder is an active member ceases to be such a scheme,(b) that event is not the effect of any action or omission by the jobholder or the employer, and(c) the relevant date is the jobholder's first automatic re-enrolment date after that time.
	(5) The third case is where—
	(a) there is a period beginning at any time after the jobholder's automatic enrolment date during which the requirements of section 1(1)(a) or (c) are not met (so that the person is not a jobholder for that period), and(b) the relevant date is the jobholder's first automatic re-enrolment date after that period.
	(6) Where subsection (3) applies—
	(a) section 5(2) has effect as if the reference to an automatic enrolment scheme were, in relation to the relevant date, a reference to a scheme ("the new scheme") of the kind referred to in subsection (3)(a), and(b) section 4(2) to (4) apply in relation to the new scheme as they applied in relation to the scheme referred to in subsection (3)."
	On Question, amendment agreed to.
	Clause 6 [Jobholder's right to opt in]:

Lord Skelmersdale: moved Amendment No. 22:
	Clause 6, page 4, line 5, at end insert—
	"( ) The first regulations under subsection (4)(b) shall not be made unless a draft of the statutory instrument containing them has been laid before, and approved by a resolution of, each House of Parliament."

Lord Skelmersdale: This is one occasion on which I have managed to pre-empt the Government, by accident rather than design, because with the amendment are grouped government Amendments Nos. 137 to 139. Also in the group are three other of our amendments, Amendments Nos. 36, 51 and 52. The Government have accepted many of the recommendations of the Deregulated Powers and Regulatory Reform Committee of your Lordships' House. The intention of our Amendments Nos. 22, 36 and 52 has been fulfilled by the government amendments in the group. However, our Amendment No. 51 is not matched by a government amendment.
	There is, once again, a certain vagueness about Clause 12(2). It seems that the Government cannot make up their mind. Your Lordships' Delegated Powers and Regulatory Reform Committee recommended in paragraph 19 of its report that either prescribed features should be more closely defined to the Government intention of dealing with schemes that fail to revalue accrued savings or that the power should come under affirmative approval. The Government response was:
	"In their report the Committee signalled concerns over the regulation-making power at 15(2)(c) citing that the power conferred was too wide ranging and risked an average salary scheme to be removed from the definition of 'qualifying scheme' on any ground".
	I emphasise "any ground". They go on:
	"The Committee recommended that the delegation at Clause 15(2)(c) should be more closely confined to the purpose which the delegated powers memorandum states that it is being conferred. We are currently exploring with stakeholders, whether the power allowing the Secretary of State to exclude average salary schemes with prescribed features is required. Following these discussions we will either remove this power or table an amendment to make this power affirmative rather than negative".
	I am extremely grateful to the Minister for inviting me to some of these stakeholder meetings, one or two of which I have been able to attend. The noble Baroness, Lady Hollis, and I went to one only last week but not, alas, on this subject. With whom is the department holding discussions and which option looks more likely? Does it expect to be ready by Report stage to bring back whatever amendment is considered appropriate? I beg to move.

Lord Tunnicliffe: I am not prepared for such a change in position, so I will have to improvise. I rise to speak to government Amendments Nos. 137, 138 and 139. I understand that Amendments Nos. 22, 36 and 52 will not be pressed.

Baroness Hollis of Heigham: My list says only Amendments Nos. 137 and 139. It may be that the Marshalled List is changing by the half hour.

Lord Tunnicliffe: My notes cover Amendment No. 138. I believe it has simply been omitted from the Marshalled List. I will speak to Amendment No. 138 and see what happens. We have come straightforwardly to the Delegated Powers and Regulatory Reform Committee, which recommended that the powers covered by our amendments should be subject to affirmative procedure on first exercise. We accept its recommendations. Amendments Nos. 137, 138 and 139 will make the powers subject to affirmative procedures. These amendments also address the Delegated Powers and Regulatory Reform Committee's recommendation on the powers of Clause 15 and Clause 85. It will be helpful if I explain briefly what each of these powers does.
	The power in Clause 15(2)(c), which relates to average salary schemes, is there to safeguard members' private pension savings. It is a precautionary reserve power that could be used if there are schemes that do not revalue appropriately the earnings on which benefits are calculated, meaning that benefits do not, therefore, maintain their value in retirement. Amendment No. 51 would remove the power to disqualify such average salary schemes. I emphasise that we believe the number of schemes operating in this way to be negligible. The power is a precautionary measure to prevent members saving in schemes where the value of their benefits may be eroded over time. It is our intention to consult our stakeholders before the power is exercised.
	Turning to Clause 85, the majority of the workforce is already within the scope of the Bill. However, Clause 85 provides the Government with the flexibility to extend the scope of employer duty to individuals who do not fall within the "worker" definition. It will also enable to Government to bring a new group within its scope, should one be created that does not automatically fall within the core definitions in this Bill. We recognise that, as drafted, the powers of Clause 52(2)(c) and Clause 84 are wide-ranging and that it is appropriate that they be subject to parliamentary scrutiny and exercised by the affirmative procedure.
	Finally, for the same reason, these amendments also make the new power in Clause 16(1)(c), which allows for additional criteria to be prescribed for automatic enrolment schemes, subject to the affirmative procedure. I reassure the Committee that the Government will share their plans for the process and notices to be regulated under Chapters 1 and 2 of the Bill. We aim to share these plans in the autumn before going on to publish draft regulations in spring 2009, which will then be followed by a technical consultation in the usual way.
	I am pleased that the noble Lord, Lord Skelmersdale, will not be pressing Amendments Nos. 22, 36 and 52. However, I hope that the noble Lord is reassured by our intention of modifying the Bill to meet these recommendations. I reiterate that we will be addressing all the Delegated Powers and Regulatory Reform Committee's recommendations, and amendments have been—or will be—tabled to that effect. I therefore urge the noble Lord to withdraw his amendment and beg to move government Amendments Nos. 137, 138 and 139. I am sorry; I will speak to them, and move them in their place.

Lord Skelmersdale: I was not going to comment on that House of Lords faux pas, but I point out that towards the end of my few words I asked the Minister who the stakeholders are in this case. In other words, who are the Government holding discussions with? Which option currently looks more likely? In other words, will the Government remove the clause from the Bill, or make the order affirmative? Whichever they decide, do they expect to be ready by Report stage? I understand that Report stage is currently planned for some time after the Summer Recess. I have not had confirmation, but that is the rumour. The Minister might be able to confirm that.

Lord Kirkwood of Kirkhope: Perhaps I may add a pedantic word here. I generally support what the noble Lord, Lord Skelmersdale, has just said. It is offensive to have in parliamentary procedures affirmative orders on first use. In my view, orders should either be affirmative or negative. Governments now, as a matter of course, hybridise statutory instruments and go for a halfway house of "on first use". It confuses the picture. Can the Minister explain why they are restricted in this way and whether they are not simply affirmative orders—with a capital "A"—from start to finish?

Baroness Hollis of Heigham: I disagree with that point of view as someone who has been in a similar position. Time and again, there will be concerns raised in the House about the use of a statutory instrument or order that the Ministerial Bench may feel is misplaced. Ministers might, nonetheless, wish to help the Opposition, so when that order first comes up there is a commitment to proper parliamentary review. After that, it is assumed that those concerns and fears have been addressed and we do not need to continue. Should the Opposition feel that issues remain, they can raise them through the negative procedure. We should not litter dinner hour business or Moses Room procedures with unnecessary affirmative orders about which there is no concern, around which there has been consensus and, where—after the original parliamentary debate—there has been at least one debate on the Floor of the House or in Committee. That is a sensible way of ensuring initial parliamentary scrutiny but then clearing the decks so that it does not become permanent graffiti on the shoulders of opposition spokesmen at ungodly hours in this Chamber.

Lord Skelmersdale: I strongly agree with the noble Baroness, Lady Hollis—she may think "for once", but in fact I have agreed with her on numerous occasions. The noble Lord, Lord McKenzie, will remember that I requested in, I think, the CMEC legislation, although it might have been the Welfare Reform Bill, that we should have orders debated in the affirmative manner the first time around and thereafter slipping down to the negative resolution procedure precisely for the reasons given by the noble Baroness. I am afraid that for once the noble Lord, Lord Kirkwood, is not on to a winner.

Lord Tunnicliffe: The last thing I want to do is offend the Committee in any way. Taking the simple position, we are doing what the wise Delegated Powers and Regulatory Reform Committee recommended, and that seemed to be a good thing. We agree with the summary of my noble friend Lady Hollis that using the affirmative procedure the first time works well. I can confirm that we have consulted the actuarial profession and scheme representatives. We see the whole issue of average salary benefit schemes as an entirely precautionary power. In 2006 some 2 million members in average salary schemes were revalued with the prices index. There are no statistical data for those that revalue in line with earnings, but we believe that is because the numbers are insignificant. Indeed, there are no statistical data on such schemes because we do not believe that there are any being run in that way. We will lay regulations only if it emerges that workers are at risk of seeing their savings being kept at below the reform minima. Therefore we have decided to go for the affirmative option.

Lord Skelmersdale: I am still trying to discover when these changes, if necessary, will actually be laid; that is, whether at the Report stage or not.

Lord Tunnicliffe: I am terribly sorry, but as I understand it, the option is in front of us. Either we set criteria about average salary schemes to go into the Bill or we will have a wide-ranging reserve power to be exercised only through the affirmative procedure. Our view is that because they are so unlikely to be used, we would like to stick with the powers in the Bill, but on the condition that the affirmative procedure is used.

Lord Skelmersdale: But the affirmative procedure would entail a change to the Bill as, indeed, would removing the power. Whichever way we go, an amendment will be required. My question is: when is it to be tabled?

Lord Tunnicliffe: We are confused. I will send the noble Lord a letter.

Lord Skelmersdale: On that basis, I really have no option but to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McKenzie of Luton: moved Amendment No. 23:
	Clause 6, page 4, line 6, leave out subsection (5) and insert—
	"(5A) For the purposes of arrangements under subsection (3) regulations may require information to be provided to any person by the employer or—
	(a) where the arrangements relate to an occupational pension scheme, the trustees or managers of the scheme;(b) where the arrangements relate to a personal pension scheme, the provider of the scheme.
	(5B) For the purposes of arrangements made under subsection (3) in relation to a personal pension scheme, regulations may deem an agreement to exist (subject to section 7) between the jobholder and the provider of the scheme for the jobholder to be an active member of the scheme on terms and conditions determined in accordance with the regulations."
	On Question, amendment agreed to.
	Clause 6, as amended, agreed to.
	Clause 7 [Jobholder's right to opt out]:

Lord McKenzie of Luton: moved Amendment No. 24:
	Clause 7, page 4, line 26, leave out subsections (2) to (6) and insert—
	"(2) If the jobholder gives notice under this section—
	(a) the jobholder is to be treated for all purposes as not having become a member of the scheme; (b) any contributions paid by the jobholder, or by the employer on behalf of the jobholder, must be refunded in accordance with prescribed requirements.
	(3) Regulations under subsection (2)(b) may, in particular, make provision about—
	(a) the time within which contributions must be refunded;(b) how the amount to be refunded is calculated;(c) the procedure for refunding contributions.
	(4) The Secretary of State may by regulations make further provision in relation to notices under this section.
	(5) The regulations may in particular make provision—
	(a) as to the form and content of a notice;(b) as to the period within which a notice must be given;(c) as to the person to whom a notice must be given;(d) requiring any person to make prescribed arrangements for enabling notices to be given;(e) requiring any person to take prescribed action in consequence of a notice (in addition to any action prescribed under subsection (2)(b))."

Lord McKenzie of Luton: In moving Amendment No. 24, I shall speak to the other government amendment and respond to the further amendments in the group. Automatic enrolment creates a new presumption to save, but workplace pension saving will not become compulsory. Individuals will still be able to choose whether to participate in pension saving, and our aim is to ensure that any decision not to participate is an active one, not the default. Clause 7 provides jobholders with the right to opt out of workplace pension saving. Amendment No. 24 will ensure that the Government will be able to prescribe the process by which a jobholder opts out, including when and to whom they give notice. The drafting of the clause has also been simplified to aid understanding. Amendment No. 33 clarifies that an opt-out notice may be authorised as well as signed. This is to ensure that we do not inadvertently rule out the possibility of electronic communication. However, we will ensure that any use of electronic media to authorise and process opt-outs cannot be misused by employers in any way that undermines participation when we come to prescribe the opt-out process in regulations.
	Amendment No. 28 would mandate that an opt-out notice would have effect only if it was given direct to the scheme administrator, thereby ruling out any other arrangements. We need to ensure that employers do not coerce their jobholders to opt out. An employer should play no part in the jobholder's decision-making process. However, when a jobholder does opt out, the deductions from their wages will need to be stopped, so the employer will need to know, perhaps quite quickly. At this stage, we think it is important to retain flexibility to assess all options, taking into account the needs of jobholders, their employers and pension schemes. We shall set out our proposals for the detailed process when we come to make the regulations under this clause.
	The opposition amendments seek to do a number of things, the first of which would be to ensure that jobholders may retain any enhanced protection from tax charges on existing pension pots that exceed the lifetime allowance introduced by the 2006 A-Day reforms if they opt out. Jobholders who opt out under Clause 7 will statutorily be treated for all purposes as not having become a member of the scheme into which they were automatically enrolled. The key words are "for all purposes" as these ensure that any enhanced protection due to a jobholder remains intact if they opt out.
	These amendments also remove the right to a refund, which is an important part of the process of unwinding membership. Our intention is that any contributions paid by jobholders who opt out under Clause 7 will be refunded to the jobholder. Similarly, any contributions paid by the employer will be refunded to the employer. However, it is too soon to say how the refund of contributions will operate or, for example, to assess the full implications for tax purposes. The first destination of a refund of jobholder contributions may need to be the jobholder's employer to enable income tax to be deducted from earnings, which is now payable because it is not a pension contribution and therefore no longer eligible for tax relief on pension savings.
	We may also need to maintain some flexibility around the handling of refunds of employer contributions. For example, some employers choose to leave their contributions at the disposal of the scheme trustees when a worker opts out either as a contribution to administration costs or to be used by the trustees for the benefit of the members. This is a highly technical area, and procedures for handling the return of contributions will be a matter for further detailed consultation with stakeholders as we develop the regulations. However, I want to make it clear that whatever the regulations prescribe for the process, the refund due to a jobholder will find its way back to that worker, while the employer's contribution will go to the employer.
	Getting the length of the opt-out period right is extremely important, and the Government have a balance to strike in this regard. Some jobholders may find it helpful if the period were long enough for them to experience the impact of pension saving on their pay while they still have time to opt out. However, the central thrust of these reforms is to facilitate and support participation in workplace pension saving, so we do not want an unnecessarily long opt-out period to result in jobholders who might otherwise have participated to waver and opt out after, say, three months. In addition, employers and schemes should not be kept waiting too long to discover who is in and who is out. Either way, there is nothing in the Bill which limits the length of the opt-out period in any way or stipulates that it must be same for all jobholders. I suggest that we return to this issue when the time comes to set the period through regulations.
	We want to make sure that people who are considering whether to opt out fully understand the implications of such a decision. This is why the opt-out notice should include information about the effect of opting out, which may also provide jobholders with an element of protection against employer coercion. While we want to ensure that an opt-out notice may be authorised as well as signed, we will ensure that any use of electronic media to authorise and process opt outs cannot be misused by employers in any way that undermines participation. I beg to move.

Viscount Ullswater: I must advise the Committee that, if the amendment is agreed to, I will not be able to call Amendments Nos. 28 to 31 inclusive because of pre-emption.

Baroness Noakes: moved, as an amendment to Amendment No. 24, Amendment No. 25:
	Clause 7, line 3, after "purposes" insert ", including whether a relevant benefit accrual has occurred within the meaning of paragraph 13 of Schedule 36 to the Finance Act 2004 (c. 12),"

Baroness Noakes: I hesitate to criticise the Minister, but he did not allow me to speak to my amendments to his amendment before replying to my amendments. The purpose of retabling our original amendments, which would have been pre-empted by his amendment, as is clearly marked on the Marshalled List, was to enable me to argue the points that I wished him to answer before he answered them. The Minister might think that I ought to sit down because he has anticipated everything that I want to say. Perhaps his officials will look more carefully at the Marshalled List before they produce his speaking notes in future.
	We were obliged to table the amendments in this way because we had prepared for this debate before seeing the Minister's virtual rewriting of Clause 7. I will be speaking to Amendments Nos. 25 and 27, which are amendments to Amendment No. 24, and my noble friend Lord Skelmersdale has prepared to speak to Amendments Nos. 26 and 32. As has been noted, Amendments Nos. 29, 30 and 31, which they replace, will be pre-empted. They should not still be on the Marshalled List, because they have been replaced.
	Amendment No. 25, as an amendment to Amendment No. 24, simply seeks to get on record—the Minister has done it—that the words "for all purposes" would encompass the specific example that I raised in connection with effectively avoiding relevant pension accrual in the terms of the Finance Act 2004 for enhanced protection purposes under pension simplification. "Pension simplification" is anything but pension simplification, but there we are. This is crucial because it has huge financial significance for those few people who are affected by opportunities for enhanced protection—I declare an interest in that. However, the Minister has put on record the fact that the words can encompass that particular avoidance of relevant benefit accrual.
	I should like to go a little further in relation to Amendment No. 27, which states:
	"The regulations may make different provisions for different categories of jobholder".
	The Minister's response was that the period should not be too long, but perhaps I may explain why the regulations should allow for different periods. Most employees are on a weekly or monthly payroll and will see fairly quickly whether they have been auto-enrolled into something that they do not understand; they can then query why money is being taken from them. However, it is not always the case that payment is made on a weekly or monthly basis. I raised earlier the question of non-executive directors—I will leave that as open business between us at this stage—some of whom are paid quarterly. I imagine that other part-time employments pay quarterly as well. It could be three months or more before such people get their first payslip and are able to find out what has happened; in such cases, three months may not be appropriate. What happens with workers who go abroad—or, indeed, are based abroad—and the paperwork does not catch up with them? What happens with workers who are in hospital or are otherwise running behind?
	The purpose of the amendment is to point out that there are many circumstances when it would be right and appropriate for a longer period to be specified by the Government. The Minister pushed back and said, "We can do longer, but we should not give people a long time because, basically, we want to keep their options to opt out restricted". He should consider that it is perfectly reasonable to have periods longer than three months—I think that that has been referred to as the time period—for certain categories of employee. That is the point that I have been seeking to make with my amendments. I shall formally move my amendment in order to keep the debate going. I beg to move.

Baroness Turner of Camden: I realise, of course, that my amendment has been ruled out by the Minister's amendment. It is not my intention to move Amendment No. 28.

Lord Skelmersdale: I suppose, technically and formally, we ought to withdraw the first amendment to the amendment before we get cracking on the second amendment to the amendment, but it will be for the convenience of the Committee if I speak now.
	Unlike the situation in which my noble friend Lady Noakes found herself a few minutes ago, in this case the Minister has not quite shot my fox. Indeed, it is not even wounded. I said on Second Reading that I assumed that when an employee opted out of automatic enrolment within the permitted period the money would have been put into some kind of escrow account. The Minister did not correct me then; he has not done so since in one of his now famous letters; and he did not just now when he succeeded in pre-empting my noble friend. I can only assume that I was right.
	The Minister said that it is too soon to state how this will operate in terms of who will control the money and take responsibility for repayment and how it will be refunded. I certainly accept that. However, it is not too early to say to whom it will be refunded: in other words, who will get the money. There must be a policy on this somewhere; without one, you can hardly start discussions with stakeholders. Will the employee get only his input back and the employer get his whack, or will the employee get the lot? I said on Second Reading that I doubted that interest would be paid to anyone and I assume that this is still the Government's intention.
	I have already expressed my concern about the amount of information flying around with regard to Clause 5 and automatic re-enrolment. Clause 7 concerns the jobholder's right to opt out. Subsection (7) tries to specify the content, or at least some of it, that must be sent to the jobholder. We know that the jobholder must give notice of his intention to opt out in a prescribed form as specified in subsection (6), which Amendment No. 24 will not amend. That subsection, together with subsection (7), remains as it is printed in the Bill. They both, however, will refer to new subsections (4) and (5), inserted by Amendment No. 24. I am sorry that this is all so complicated, but the complication is not of my making. The purpose of my amendment is to establish just how much information the notice in subsections (4) and (5) in government Amendment No. 24 will consist of and to find out how the jobholder is expected to know what the Bill calls "the effect" that the notice will have on him and his further actions. Obviously, one effect is that he will lose the pension savings that he would have had had he remained in the scheme; the other is that he will get his money back. Will the information in the notice be as basic as that, or does the Secretary of State intend to prescribe something more complicated?

Lord McKenzie of Luton: Let me see whether I can deal with the residual matters that I did not cover when I moved the amendment. The noble Baroness, Lady Noakes, raised some issues about circumstances in which a longer opt-out period might be appropriate. An interesting issue is the extent to which jobholders seeing a wages or salary slip with the deduction is an important component of this. I do not say that it is not, but let me reiterate that the Bill does not place a limit on the opt-out period in any way, nor does it stipulate that it must be the same for all jobholders. The point that the noble Baroness has raised ought to be taken into consideration in our deliberations on that. I hope that that deals with that point.
	The noble Lord, Lord Skelmersdale, asked about refunds and who would get their money back. I thought that it was clear that the employer's contribution would go back to the employer and the employee's contribution would go back to the employee, subject to whether the employee has had a tax deduction in the first instance, in which case we go back to how that relief is to be generated. It would likely follow—again, this is still the subject of detailed consideration—that the contribution coming back would have to be taxed. If you deduct it from what is taxed in the first instance and it comes back, that would somehow need to be put into reverse. However, the principle is clear. The employer's contribution comes back to the employer and the employee's contribution comes back to the employee.
	The noble Lord asked whether the funding would go into some sort of escrow. Again, that depends a little on the timing and mechanics of the opt-out. This is still under consideration. Whether we opt out at a point in time when the payment has been made into the scheme or while it is still in transit into the scheme is a detail that we need to work through as we develop this policy, but I would hang on to the point that the employer's contribution goes back to the employer and the employee's to the employee. I hope that that has addressed the issue.

Lord Skelmersdale: If the money has been taken from the employee's salary, it must go somewhere. It does not matter whether it is in transit or not. If the employee opts out within the prescribed period—Ministers were, I know, thinking of a month for that, but we will see what transpires—there will be an amount of money floating around that is going back, as the noble Lord has now said to me but which I did not understand before, to the employee or the employer as appropriate. I wonder whether the employer is appropriate, because pensions are deferred wages. Even in the arrangements for personal accounts, they will turn out to be deferred wages. Wages are owed to the employee, surely. I leave the noble Lord to chew that over because it is a slightly extreme thought.

Lord McKenzie of Luton: I shall try to tidy up one or two points. In terms of where the money is, it depends on the arrangements by which payments are made from the employer into the scheme and at what point in that process the opt-out is exercised. If the money has reached the scheme, there will need to be a process for the money to come back out of the scheme. If the money has not yet reached the scheme, it will be somewhere with the employer or in transit, in escrow or not, but probably not. Those processes need to be worked through. As to who the direct recipient should be, it depends in part on the process by which tax relief is obtained, because it may well be that the employer has to tax that refund. It depends a little on what arrangements are entered into. We cannot be prescriptive until we have worked through some of that detail.

Lord Skelmersdale: The Minister could have saved an awful lot of time if he had said, "I will tell you when I know".

Baroness Noakes: To reiterate what my noble friend said, the Minister has demonstrated that the Government have very little idea how this is going to work in practice. We will need to consider carefully between now and Report whether we need to see more definition before letting this Bill go forward. For now, I beg leave to withdraw Amendment No. 25.

Amendment No. 25, as an amendment to Amendment No. 24, by leave, withdrawn.
	[Amendments Nos. 26 and 27, as amendments to Amendment No. 24, not moved.]
	On Question, Amendment No. 24 agreed to.
	[Amendments Nos. 28 to 32 not moved.]

Lord McKenzie of Luton: moved Amendment No. 33:
	Clause 7, page 4, line 43, after "signed" insert "or otherwise authorised"
	On Question, amendment agreed to.

Lord Skelmersdale: moved Amendment No. 34:
	Clause 7, page 4, line 43, at end insert—
	"(8) A job holder may give notice within a prescribed period before the automatic enrolment or re-enrolment date.
	(9) If a job holder gives notice under subsection (8), no contributions may be taken from the job holder or the employer on behalf of the job holder, notwithstanding any prescribed conditions for their repayment."

Lord Skelmersdale: I was going to say that we have had a long and useful discussion, covering all the ramifications and proceedings for a jobholder opting out of a qualifying scheme. Unfortunately I cannot say that. However, I do not think that even if we had had a lengthy discussion we would have covered the one point that I wish to make with this amendment, which is to add an extra two subsections to Clause 7, the first to say that a jobholder may give notice under this clause within a prescribed period before the automatic enrolment or re-enrolment date and the second to say that, if a jobholder gives such notice, no contributions may be taken from the jobholder or the employer on behalf of the jobholder, notwithstanding any prescribed conditions for their repayment. The amendment seeks to ensure that a jobholder is not prevented from opting out before the automatic enrolment date, thus stopping the process before any contributions are taken either from his pay packet or the employer's account.
	We are not talking about inconsiderable sums that are going into what I call an escrow account and what the Minister sometimes calls an escrow account. Even if the qualifying scheme takes only the minimum contribution of 3 per cent from the jobholder, at the top end we are potentially talking about more than £80 disappearing with little warning for several weeks from the jobholder's pay packet. I hope that my maths is correct. The figure is 3 per cent of £2,795, which is one-12th of £33,540—in other words, the UEL. For someone earning at the bottom end, the figure that I calculate is £12.58. That is likely to represent a significant loss of income to a low earner.
	Not only would giving a jobholder the possibility of opting out before the automatic enrolment or re-enrolment date allow him to preserve the whole of his pay packet if he considered it necessary, but it would save an awful lot of time and money that would otherwise be wasted on the collection and repayment of all those contributions mentioned in the previous group of amendments. My amendment would do nothing to weaken the advantages of auto-enrolment. There will be just as much inertia about opting out before the first contribution has been taken as after that point; indeed, there is probably much more, as the jobholder will not just have experienced a sudden 3 per cent drop in his take-home pay. I beg to move.

Lord McKenzie of Luton: Clause 7 is essential to the reforms, as it enables jobholders to opt out. We are keen to ensure that jobholders are aware of the effect of opting out before they take such a step. An individual cannot opt out of pension saving until they are in pension saving in the first place. People's circumstances change. The opt-out decision must be a considered one. We do not want people to rush for the exit just because pension saving might be new for them or because they have at some time in the past made a decision not to save for a pension.
	I am concerned that the amendment would subvert the reforms. It would encourage premature and hasty decisions and increase the risk of employer coercion. It would allow a jobholder effectively to halt any attempts to enrol them into pension saving, and they would thereby lose the benefit of an employer contribution. We recognise that individuals will need access to relevant and accurate information when they are auto-enrolled, as in any other circumstances when they are making decisions about their retirement, and Clause 9 reflects that. However, we must avoid subverting the central objective of the reforms. I hope that the noble Lord understands why I am unable to accept the amendment. I urge him to withdraw it.

Lord Skelmersdale: There are some moments when I get the idea that I am being dropped on from a great height. This is one of those moments. I am surprised that the Minister thought so little of this idea, because there would be an enormous saving in administration. One of the things on which we are all agreed is that the scheme must be kept as simple and as cheap as possible. This was one way to achieve that. Clearly, however, we will not get any further tonight, so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 7, as amended, agreed to.

Baroness Noakes: moved Amendment No. 35:
	After Clause 7, insert the following new Clause—
	"Jobholder's further rights to opt out
	(1) This section applies to a jobholder to whom arrangements under section 3(2), 5(2) or 6(3) apply (arrangements for the jobholder to become an active member of an automatic enrolment scheme).
	(2) If a jobholder gives notice in accordance with this section, he is to be treated as ceasing membership of the scheme from the date specified in the notice which must be at least one month after the date the notice is given.
	(3) With effect from the date specified in the notice, contributions will be payable neither by the jobholder nor by the employer.
	(4) The Secretary of State may by regulations make provision about the form and content of a notice under this section.
	(5) Regulations must provide for the notice—
	(a) to include information about the effect in relation to jobholders of giving notice under this section, and(b) to be signed by the jobholder."

Baroness Noakes: This amendment would insert a new clause after Clause 7. Clause 7 allows opting out of auto-enrolment during a period after joining that is yet to be specified, as we have just been debating. My new clause would allow an employee to opt out at any time, but only from a future date; that is, it would not involve going back and refunding contributions, as an early opt-out under Clause 7 provides. Obviously people's circumstances change; they may not be able to afford to continue their contributions or they may analyse that they will not receive enough back from future contributions, due to means-tested benefits or otherwise.
	The Explanatory Notes for Clause 7 say that active members of a scheme are free to cancel membership at any time, but there is nothing in the Bill to allow that. It may well be an intrinsic legal right within an occupational pension scheme, but in the context of the Bill it would be better to provide specifically for later opting-out. That would include the ability of the Secretary of State to prescribe the content of a notice and would deal with all the other matters that Clause 7 deals with in respect of early opt-outs. For example, it must surely be important that an individual is informed of the effect of his or her decision, in the same way as an early opt-out under Clause 7 will be. Presumably, it will be important to inform the individual of their rights to opt back in and the effect of automatic re-enrolment.
	The burden of my amendment is therefore to say to the Government that they should explicitly deal with opting out after the initial opt-out period, and that, even if that is not necessary as a matter of law, it would be better to control the circumstances and information flows in those cases. I should say that I drafted it on the basis of Clause 7 as it appears in the Bill and not as amended a few moments ago, so the amendment itself is not on all fours with Clause 7 as it will appear in the Bill. Still, if the Minister looked kindly on my amendment, that would not be an insuperable obstacle between now and Report. I beg to move.

Lord McKenzie of Luton: I thank the noble Baroness for her amendment. I suspect she has probably anticipated my response. Clause 7 completely undoes scheme membership and guarantees a refund to those jobholders who opt out. Active members of a workplace pension scheme may stop contributing at any time. I assure the Committee that Section 160 of the Pension Schemes Act 1993 will remain in force and that, when these reforms are in place, individuals will still be able to cancel active membership after the opt-out period ends. The noble Baroness's proposition to put a separate process in the Bill is therefore unnecessary. It also adds to administration, which her noble friend is keen to avoid. There will be the ongoing right, embedded in existing pension scheme legislation, for people to withdraw from a pension scheme in accordance with that legislation and the rules of the scheme.

Baroness Noakes: I am disappointed in the Minister. The Government seem quite prepared to heap unnecessary burdens on employers, whom they view largely as "coercive" and "abusive", words that have recurred today. Here I am trying to impose a small burden on employers—not my normal wont—in order that employees are reminded of their rights and obligations in relation to pensions. I urge the Minister to think again on this. While I accept that an employee can opt out under existing pension legislation in the context of the Bill, which is trying to draw people back in all the time to ensure that they understand what their rights and obligations are, it is right to specify the terms on which they can opt out, to remind them of the consequences of opting out and to remind them of the automatic re-enrolment process that will come and hit them within three years in any event. It is not enough just to say that they can opt out at any time and good luck to them; that is not the tenor of the approach to employees throughout the rest of the Bill, which is to try to keep them drawn into the scheme and to make it difficult for them to stop saving. For today, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 8 [Workers without qualifying earnings]:
	[Amendment No. 36 not moved.]

Lord McKenzie of Luton: moved Amendment No. 37:
	Clause 8, page 5, line 32, leave out paragraph (a)
	On Question, amendment agreed to.
	Clause 8, as amended, agreed to.

Baroness Royall of Blaisdon: I beg to move that the House do now resume. In moving this Motion, I suggest that the Committee stage begins again not before 8.20 pm.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.

British Association For Central and Eastern Europe

Lord Radice: asked Her Majesty's Government what assessment they have made of the work of the British Association for Central and Eastern Europe.
	My Lords, my task in this short but important debate is to celebrate the achievements of the British Association for Central and Eastern Europe. I have always called it BACEE, although some have called it other things.
	I declare an interest as chairman of BACEE for the past 10 years. Others have an equally strong interest. The noble Baroness, Lady Rawlings, who is on the opposition Front Bench, has been on the governing body for a number of years—I cannot quite remember how long, but she will no doubt tell us. The noble Lord, Lord Roper, was chairman of our organisation in the 1980s—it had a slightly different name at the time, but I shall come on to that. I welcome the noble Lord, Lord Dykes, to our debate, and we all want to hear what the Minister says when he winds up.
	I shall start with the bad news, although I shall not continue in this vein because we are here to praise BACEE and not to—I was going to say "bury it"—complain about our fate, because we have complained about it quite a lot already. Sadly, BACEE, which has been widely acknowledged by successive Foreign Secretaries as a notably successful FCO non-departmental public body—that is an appalling mouthful, but I think that we all know what we mean by it—has had to close. This is the direct result of the FCO's decision in August 2005 under a previous Foreign Secretary—I do not blame the present incumbents—to withdraw the grant in aid. I and my colleagues on the governing body have made it clear that we regard this decision as short-sighted and prejudicial to British interests in the area. It was not a wise decision, but an economy made by the Foreign Office under pressure from the Treasury, and it will come to regret it in the future.
	BACEE has had a proud history. Under its then title of the British East-West Centre, when the noble Lord, Lord Roper, was its chair, it kept channels open to the countries of the eastern bloc, as it was then, by organising conferences and seminars, to which some of us went. It was very important that we reached out to a number of independent people in those countries. We were an independent organisation, which was very important because it meant that we acted as a valuable counterweight to the propaganda of communist-front organisations.
	Then, after the collapse of Soviet rule in eastern and central Europe in 1989 and 1990, we did valuable work in promoting the values of civil society and helped prepare those newly independent countries for membership of the European Union through seminars, round tables and conferences targeted specifically at the political, judicial, civil service and media leaderships. Since 1991, there have been more than 5,500 participants in BACEE programmes, including more than 60 current and former Ministers from the area as well as four Heads of Government and 10 Foreign Ministers. That is a pretty impressive list.
	Then, just to show that we were moving on again, as the EU moved towards enlargement, we did not rest on our laurels but, with the active encouragement of the then Foreign Secretary Jack Straw, turned our focus to neighbouring countries outside the EU. We continued our work in the west Balkans, which is a vital area for Europe, and expanded our activities to include Ukraine, Moldova, Belarus and Turkey.
	Our programmes have been centred traditionally on well prepared conferences, seminars and study visits, but the key note of our work throughout the period has been the building-up of an extraordinary network of contacts, which with the help of our embassies in the region we developed and proved extraordinarily useful to our foreign policy. I mention as an example the New Serbia Forum, which BACEE organised in the late 1990s to prepare for a democratic, post-Milosevic Yugoslavia. It was supported not only by the British but also by the Hungarian and Swiss Governments, and proved to be one of BACEE's greatest successes. It is perhaps significant that many of the participants in the New Serbia Forum continue to play a role today in ensuring the survival of the democratic system in Serbia, which is vital to the whole European Union.
	Central and eastern Europe remains an area of key importance to the United Kingdom. Almost half the member states of the European Union, including a key heavyweight in Poland, come from the region. EU decisions on key issues, including trade, the environment, organised crime and terrorism, and energy, will require their support, to say nothing of relations with Russia. It is vital that the Foreign Office continues to focus its attention on this area and does not think that, just because those countries are in the EU, we need not worry about them any more. BACEE's governing body will want to be certain that the FO continues its work and continues to be interested in the area. I hope that the Minister will satisfy us in that regard.
	BACEE has made its own contribution to keeping our values alive and retaining interest in the area by setting up in conjunction with the School of Slavonic and East European Studies a series of public lectures or conferences, which one hopes will be held for a long time to come. Our first public lecture will be held in the autumn. The Foreign Office has assured us that it will be in the Locarno or "another fine room" there—it is apparently a technical term. I hope that the present Foreign Secretary will be our first lecturer—he certainly ought to be—and I think that he would do a very good job.
	I conclude, because we are allowed only 10 minutes and there are other speakers. On behalf of the governing body, which has included parliamentarians of all parties—I mention from the present governing body not only the noble Baroness, Lady Rawlings, but David Curry MP and Gisela Stuart MP—I would like to thank parliamentarians of all parties and representatives of the media, the judiciary, business and universities who have helped us in our work. We could not have carried it out without the support of all those people who have given their activities entirely free. I thank successive chairmen of BACEE—I think that the noble Lord, Lord Roper, will say a few words about them. I thank also our staff, who have had the difficult task of closing down an organisation successfully, and particularly our director, Nicholas Jarrold. I mention also his predecessor, Sir John Birch. Last but not least, I thank the governing body which worked so hard to make the work of BACEE a success.

Lord Roper: My Lords, I must begin by declaring an interest. I was for 12 years a member of the governing body of what was then the Great Britain-East Europe Centre and chairman from 1987 to 1990. Like the noble Lord, Lord Radice, I should like on this occasion to congratulate those who have done so much over the 40 years' life of the two bodies—the body which transformed its name in 1991 to the British Association for Central and Eastern Europe—on what has been an extraordinary service and an extremely important part of our country's external relations at very little cost.
	As the noble Lord, Lord Radice, said, we celebrate and we regret. I congratulate him on his period of 10 years as chairman of the governing body, a period which has not been an easy one but one in which, as he said—and I shall return to it—the organisation has moved particularly towards the west Balkans and into other areas, including Ukraine, and involving even people from Belarus, discussing questions and reporting human rights. These informal approaches are extremely important in those countries.
	The 40 years of BACEE's existence can be divided into three periods. The first 20 years was the period of the Cold War. During that period only four countries were involved—Hungary, Czechoslovakia, Bulgaria and Romania. Then there was the period of transition at the end of the 1980s and into the 1990s, with the addition of Poland in 1986, the Baltic states and Albania and more recently the concentration on the successor states of former Yugoslavia, together with Turkey, Moldova, Belarus and Ukraine.
	I first heard of the plans for the creation of the Great Britain-East Europe Centre when I was visiting Romania in 1966. It was in the flat of John Birch, who was first secretary in the British Embassy. Doreen Berry, who had been a senior official in the external services of the BBC and who was to be deputy director of the centre, was also visiting Bucharest and over dinner I heard what was planned to create this centre. When the centre went public in the following year, it was my noble friend Lord Rodgers of Quarry Bank who was the Minister responsible for the launch of the Great Britain-East Europe Centre.
	The governing body was then under the very distinguished chairmanship of Sir Gilbert Longden, a Conservative, with John Mackintosh, then a Labour Member of Parliament, as the vice-chairman. The centre and BACEE have had chairmen from both Houses throughout their existence. Sir Gilbert Longden was followed by the late Lord Walston and then myself. I was followed by Nigel Forman, at that time a Conservative MP, and then the late Lord Kelvedon, who was succeeded by the noble Lord, Lord Radice.
	It has also benefited from a remarkable series of retired diplomats who have been directors. The first two were Sir William Harpham and Sir Donald Logan, followed by Alan Brooke Turner and then, as the noble Lord, Lord Radice, said, Sir John Birch and, most recently, Nicholas Jarrold. As well as bringing together members of both Houses, the governing body has also been able to draw on a remarkable number of academics, journalists, lawyers and businessmen who gave their time not only in participating in the work of the governing body but also in round tables, study tours, giving advice to visitors and providing talks to visitors when they came to this country. We made an estimate that if you were to value the time that was given by the members of the governing body in various ways it was equivalent to the funds provided each year by the Foreign Office.
	The early period of the Cold War was not always easy. Some countries were more prepared for serious exchanges than others. The first round table I attended as a very new Member of Parliament in 1970 was an Anglo-Hungarian round table held in Brasenose College, Oxford. It was a success and the Hungarians seemed interested to be exposed to the range of free ideas coming from the British participants. Indeed, my impression looking back over that period was that the Hungarians were always more open than most of their partners in the exchanges. Finding effective partners was not always easy at that time. Inevitably they were official and, although there was a range of people, there were some who were closer to the centre of power in their countries than others. We thought it was useful that we were able to expose them to the sorts of ideas and societies which we represented.
	After the Hungarians, we had very good relations with the Bulgarians, perhaps because the first two directors had previously served as ambassadors in Bulgaria and therefore had very good contacts in that country. With Hungary and Bulgaria the round tables were able to cover a wide range of issues, including political ones. With Czechoslovakia and Romania the situation was rather more difficult, particularly in Czechoslovakia after the events of 1968, the time of the inception of the centre. Indeed we had to limit ourselves to having rather technical exchanges. I remember the ultimate one being discussions about hill farming in Bohemia related to hill farming in Wales. Similarly, with the gradual hardening of the situation in Romania under Ceausescu, the ground was not particularly fertile.
	As the noble Lord, Lord Radice, said, however, the most interesting period in many ways was the extraordinary work which, after 1991, BACEE was able to do at the end of the Cold War with the departure of the Soviet forces. About 5,500 politicians, civil servants, judges, journalists and businessmen, who would form civil society as potential governors and potential governments, came not to be lectured but to see how democracy worked under the rule of law in a market society. The discussions and exchanges have proved very useful. They have left us with a very useful network of friends, not only of BACEE but of this country, in the countries concerned.
	The third phase was towards the beginning of this century when attention moved from the countries that were well on their way to joining NATO and the European Union to the countries of former Yugoslavia and those neighbouring what are now the borders of the European Union—Albania, Moldova and Ukraine. As has been mentioned, probably the most interesting thing here—very much the inspiration of Sir John Birch—was the creation of the New Serbia Forum which provided a framework for the people who were going to provide the post-Milosevic government in Belgrade to get to know each other, to work together and to draw up the plans for a democratic and free Serbia.
	I believe that the successor states of Yugoslavia—states such as Bosnia, Macedonia and, though not a successor state, Albania—still need the sort of assistance which has been provided by BACEE over the years. This informal, second-track form of co-operation is able to do things in a particularly helpful way. In the same way Moldova and the Ukraine, which are developing democracies, need continued assistance.
	BACEE's methods will continue to be invaluable and that is why, like the noble Lord, Lord Radice, I hope that the Minister can say that, although the organisation is no longer in existence, the work which it has been doing can be continued by new methods.

Lord Dykes: My Lords, I am sure that the whole House is extremely grateful to the noble Lord, Lord Radice, for launching this debate, which those who do not know the amazing story of BACEE might find esoteric; they would not be quite sure what actually happened. I also thank the noble Lord, Lord Roper, for his account of the earlier years. It is a great story of British achievement and also the achievement of those who attended the seminars and meetings of what might be described as an international roving Chatham House, an entity that was here, there and everywhere. Other countries have similar organisations of all kinds, but the focus on eastern Europe of this organisation and its predecessor was really of crucial importance.
	One of the great things, to which the noble Lord, Lord Roper, alluded, was the lack of condescension in the approach that BACEE made to people. One can imagine the sensitivity needed in those approaches, particularly in the grimmer days of the Cold War, when contacts were much more limited. The turbulent history of eastern Europe was a complicated matrix, which people needed to absorb to work for BACEE, as volunteers and members of staff, in order to avoid the intense irritation that the recipients of their words of advice would feel if it was handled in the wrong way. In fact, it was handled with great sensitivity.
	We remember the old Foreign Office enthusiasm for BACEE in the old days—and we come on to that theme now. We need to hear from the Minister about what has happened, and so on, and just to remind us again about what I think is a sad story. I speak only personally, although I also represent these Benches, but I think that there was an argument for keeping BACEE going, even after the huge changes in the political economy of the principal countries.
	The only one of these countries that, sadly, I know at all well—and this is a terrible confession on my part—is Moldova, which is just about the smallest of them. Moldova would not resent people saying in the westernmost part of western Europe that that country needs urgent help of all kinds. It is a country of great poverty, but it has a sophisticated political leadership of all the parties and is trying to find its way forward. It is next door to much bigger countries—Romania, with all its problems, and Ukraine. That is one country to which particular attention needs to be given. The All-Party Moldova Group is trying to focus on those themes as well, particularly after a very successful visit several years ago. The other countries, regrettably, I know only from brief visits, so I am not an expert, as are the noble Lord, Lord Radice, the outgoing chairman—I say, sadly, now that BACEE has closed—and the noble Lord, Lord Roper, one of the previous distinguished chairmen, with their detailed knowledge of these matters.
	A lot of good was done. Various reports were issued over the period and many references were made to the successes with those countries. Of course, BACEE was even more important in the sense that too many members of the public in western European countries, because of how the press writes its stories, thought that everything was much more wonderful in our countries than in the single-party state, Communist countries. On the other hand, the propaganda in the single-party state, Communist countries said that everything was much worse in Dickensian terms for people living in western European democracies. The Soviet Union used to focus on lots of stories about Dickensian England in the 1950s and 1960s. There were many such examples; people forgot about the obvious complications of all those sophisticated eastern European societies, some of which had been flourishing democracies or putative quasi-democracies before the Second World War, but did not have a chance to complete that process.
	Obviously, BACEE's was a small effort in terms of the amount of political and other activity put in to change the nature of those countries, but 5,000 people is not a bad tally, as the noble Lord, Lord Roper, suggested. It must have had some considerable effect, as people saw the huge changes coming from the fall of the Wall, which was very abrupt—and thank goodness it was done in peaceful conditions. We should pay tribute sometimes to these things—for example, when we recall how the Red Army in East Germany recognised the reality of those fundamental changes, when it would have been so easy for senior military personnel in that army to make a different decision, fatally different and terribly tragic, to try to keep the status quo going. They knew what was happening because of how people voted with their feet and the Trabants poured into Czechoslovakia and elsewhere. It has now since become fashionable to have a convertible Trabant in eastern Germany; it is regarded as a very glamorous car. Things change in all societies.
	The efforts that were made then and the way in which people reacted to them presaged very substantial changes. Those countries could easily have had their own alliances locally or regionally or become democracies of one kind or another more gradually; but they did not, and we now see the amazing difference. One might sum up the history of BACEE, and the observations of its members and staff over the years, as the three great stories of Europe after the Second World War, which was a huge, ghastly tragedy. Franco-German reconciliation in western Europe was an amazing story, to which the British press do not give enough attention; indeed, some newspapers in Britain do not like the idea much, for some bizarre reason. The second story was how the Soviet Union came to and end, in remarkably peaceful circumstances. Russia had its own internal coups, but they did not affect anyone outside. We should pay credit to the quality of the leadership in Russia and the Soviet Union for achieving those things, although President Gorbachev was very disappointed with how they did not keep the Supreme Soviet and some of the other structures.
	The final story must be the gradual approach and culmination of becoming EU members for quite a few of those countries—eight of them, originally, and then Bulgaria and Romania following and making it 10. It is an amazing story of an achievement. Bumpy rides are still to come, which is why an organisation such as BACEE should still exist—but, sadly, it does not. Other countries will be joining the European Union. Heaven forfend that I mention the subject of tomorrow's debate—the Third Reading of the European Union (Amendment) Bill—but if the Lisbon treaty somehow revives in due course, with the consent of the Irish people and in whatever form, with adjustments, that, too, will help those new countries. Their enthusiasm for the institutional arrangements to ensure that the community of 27 countries worked properly has been very marked, often much more so than that of the long-standing member states. There was a common feeling about the necessity of all those things.
	In August 2005, BACEE was closed down, under the then Foreign Secretary. The outstanding Foreign Secretary now, David Miliband, might have made a different decision, but you never know. In those days, in the summer of 2005, the morale in the Foreign Office was very low, with the various budget cuts scything through the building and the embassies. Personally, I think that it was overdone, but Governments will always say that they have to make cuts in the modern world. Far too many missions have been closed down. In the mean time, the Minister, who is widely respected for many different reasons and not only because of his UN past, can give us an explanation and perhaps also try to defend that closure, because I personally regret it and feel that it was a mistake.

Baroness Rawlings: My Lords, I thank the noble Lord, Lord Radice, for starting this important debate and for chairing BACEE so well for the last 10 years. It is right and proper to call for the Government's assessment of the work of the British Association for Central and Eastern Europe. I declare an interest at this stage, having been a member since 1994, when it was chaired enthusiastically by my late noble friend Lord Kelvedon. Yet I cannot help but think that, had a more thorough assessment taken place before it was closed, we might not be depending solely on hindsight to appreciate its work. It is a platitude that in many parts of life we do not know what we have until it has gone, but I know, and noble Lords will agree, that that is not how Governments should operate.
	It was particularly interesting to hear BACEE's history from the noble Lord, Lord Roper. The budget of the Foreign and Commonwealth Office was supposed to be bolstered by efficiencies arising from restructuring, cutting administrative costs and changing the emphasis of resources. Instead, it seems to have atrophied. It has been mentioned before in this Chamber that, since May 1997, the Government have closed eight British embassies, eight high commissions and 18 British consulates, making a total of 34 closures in 10 years. This was intended to create a diplomatic surge, with diplomats reassigned to Middle Eastern posts, but it has dampened morale and led many to leave the service. While unfortunate, however, that is not the primary subject of our debate today. Any department or company faced with similar cuts might expect some of these effects, although I would argue that, if they were better managed, they would not have been so pronounced.
	I mention all this because I think that it reveals a trend that finds its most glaring example in the closure of BACEE. Instead of pruning administrative inefficiencies, the FCO seems to have gone for some of the things that are doing substantial amounts of good for relatively minor amounts of money. BACEE cost the Foreign Office about £260,000. Now we shall have to rely perhaps more and more on the British Council and all its good work. I am pleased to see the noble Lord, Lord Kinnock, in his place for the debate.
	Perhaps in a new bureaucratic age of governance, a perverse cost-benefit analysis would not give BACEE good marks, but I find that hard to believe. Since 1991, more than 5,000 politicians, civil servants, judges, journalists and businessmen from countries in central and eastern Europe have participated in BACEE's courses, seminars and conferences, as we heard from the noble Lord, Lord Radice. It was undeniably popular. Many of the leaders in power today had experiences with BACEE. They remain still grateful and good friends. The evidence for this, and perhaps even the cause of this popularity, was the long-standing approach of responding to requests for help instead of imposing an unwelcome paternalism.
	BACEE's efforts were directed at improving civil society. Out of the ashes of authoritarian rule, many central and eastern European countries continue to struggle to transform into participative democracies. These are states in transition and this period of transition could not be a more important one. It is not enough to throw off the yoke of one-party rule. Education and assistance in young democracies strengthen the fabric of civil society and provide the foundation for its long-term success.
	Or does the Minister think that the battle has been won? Is he satisfied that BACEE's aims of promoting democracy, human rights and the rule of law have been achieved in central and eastern Europe? I suspect that it would be hard to persuade your Lordships' House that there is no longer a pressing need for democracy, human rights and the rule of law in this part of Europe. Indeed, BACEE organised visits for Croatian and Kosovan delegations right up to its final week. Croatian membership of the EU is pending. Kosovo remains an issue of serious importance on the world stage. How can the Minister feel that the British Government can afford to decrease our resources and influence in this area at such a crucial time?
	What must be mentioned is the kind of help that BACEE provided under the brilliant guidance of the former ambassador, Nicholas Jarrold, whom the noble Lord, Lord Radice, mentioned, his staff and all the distinguished members. The work of BACEE was project-based. It was resolutely not for profit. What it did, however, was to foster dialogue. This seems to me one of the most important ways of assisting countries eager to establish themselves on a firmer democratic footing and to empower their citizenry.
	We believe in the importance of the European Union and enlargement of the European Union, especially in this part of the world, including Albania, Macedonia, Montenegro and others. We also believe that the EU should function properly, without too much red tape or centralisation. BACEE was exactly one of the right bodies helping to do this. Perhaps it will take hindsight for the Minister to appreciate the work of BACEE and the work that is still to be done. I hope that the contacts and good will that it worked hard to establish will continue in some form. Thus, I hope that the Minister will include in his assessment his thoughts on how progress will be made in BACEE's absence. Perhaps then he will understand what has been lost.

Lord Malloch-Brown: My Lords, I join other noble Lords in congratulating my noble friend Lord Radice on introducing the debate. As we have heard, this is an issue in which he and others have a long-standing interest. I am honoured to have the opportunity to reply to him.
	Of the many important things that I learnt tonight, the least consequential was that my colleagues in the Foreign Office misled me about the pronunciation of BACEE. I was told it was said like Bassey in Shirley Bassey. I now realise that one consequence of Foreign Office cuts is that clearly it does not follow the American entertainment scene closely enough—it meant Count Basie. More seriously, and with great humility, I concur with all noble Lords who have spoken that the British Association for Central and Eastern Europe has clearly done extraordinary work during the past 40 years in central and eastern Europe.
	Tonight, as much as anything, it is important that we note that work, honour it and recognise that the terms of the association's closure are something that few government programmes anywhere, sadly, meet, which is that it has achieved redundancy through the success of its mission. It has been closed not only because others can now take on the task that is left but principally because the core of the task has been fulfilled. These countries, barren of civil society and democratic tradition when the association began its work 40 years ago, are now, for the most part, thriving, prosperous and democratic members of the European Union. The Foreign Secretary recognised this when he wrote recently to my noble friend Lord Radice. He thanked all who had worked for BACEE for their dedication and highlighted the invaluable contribution that the organisation had made in building a closer understanding between Britain and central and eastern Europe.
	My noble friend Lord Radice, the noble Lord, Lord Roper, and the noble Baroness, Lady Rawlings, laid out at considerable length the many successes of the British Association for Central and Eastern Europe since its birth in 1967. It was born when relations were difficult between us and countries in eastern Europe, when traditional diplomacy was constrained by the stand-offs of the Cold War and the Iron Curtain and when we had to find unconventional means to reach into those societies to build friendships and to open eyes to liberty and freedom. Against the backdrop of the Soviet invasion of Czechoslovakia, the association during those dark and difficult years kept links and was able to work in countries where government organisations such as the Foreign Office found it difficult to operate.
	BACEE worked hard in that period to promote a closer understanding between the British people and the countries of central and eastern Europe. It pursued its aim of promoting democracy, human rights and the rule of law in Europe through conferences, seminars, round tables and study visits in the UK and abroad. We face a very different context because of dramatic changes during the short life of the organisation. The Berlin Wall has fallen, the Soviet Union has collapsed and many countries have emerged that are keen to join the European Union or that have closer ties with the EU than they did before. Throughout the political turbulence, BACEE focused its efforts on building democratic institutions and market economies, freedom of expression, the effective administration of justice and respect for human rights. It added to its study tours and worked in new countries, focusing on Ukraine, Belarus and others where it did not initially work. Nevertheless, in many regards, much of that mission has been accomplished.
	In particular, since 1991, as has been mentioned, 5,500 people from those countries have participated in BACEE programmes. These include more than 60 former or current Ministers, four heads of government and 10 Foreign Ministers. BACEE's founders, whom we have honoured tonight, never faltered in their belief that both halves of a then divided Europe shared a common destiny. They have been proved right: 10 of the central and eastern European countries where they worked are now members of the European Union; Croatia, Macedonia and Turkey have candidate status; and others are keen to join the EU in time. We remain committed to promoting the enlargement of the European Union, as we see enlargement as one of the most successful policy tools of achieving democracy, market reform and the rule of law. All of us who watched the efforts of candidate countries to adjust to meet the test of addressing their democracy deficits—corruption, lack of rule of law and issues of market liberalisation—know that the lever of membership of the Union in its own ways built on the BACEE concept and moved that agenda dramatically forward.
	In a letter to the Foreign Affairs Committee in September 2005, Douglas Alexander, then a junior Minister in the Foreign Office, recognised the work that BACEE had done. He noted that its project work had helped to underpin the remarkable reforms that we have seen in the region in recent years. While we can celebrate what has been achieved, I agree with the noble Baroness that we should not complacently believe that the work is done and that democracy, human rights and the rule of law are cemented and set in stone throughout the region. There are important tasks ahead of us. I assure the noble Baroness and the noble Lord, Lord Dykes, that we continue to invest in this area. The Foreign Office still spends £8 million a year on promoting stability, good governance and market reforms in the pre-accession and neighbourhood countries.
	While the noble Lord, Lord Dykes, was brave enough to mention the Lisbon treaty and the European Union, let me make a debating point. The European Union spends £3 billion a year on the same group of countries to support their efforts to prepare for membership, in the promotion of democracy and the rule of law and the building of market economies. The good Count's work, by which I mean BACEE, remains very much a subject of priority attention here and in the European Union as a whole.
	I am delighted that BACEE does not end here tonight or that it ended when it closed its doors as an active organisation. The association has decided to perpetuate its name and its valuable work through an annual lecture on a theme related to that work. My noble friend said that he hoped that the first lecture would be this autumn, under the auspices of the School of Slavonic and East European Studies, in a fine room in the Foreign Office. Like him, I was glad to hear that things other than wine came in fine forms. We hope that the Foreign Secretary will be able to give that first lecture, but my noble friend informed me of this hope only this afternoon and I have not had an opportunity to confirm whether the Foreign Secretary will be able to take up that invitation.
	In closing, I add my thanks and congratulations to the thanks and praise that have been advanced in this debate for all who were directors of BACEE, those who were members of its board and those who chaired it during the past 40 years. If ever there has been an historic achievement that has changed the direction of our world in the past 40 years, it is the securing of freedom for the countries of the former Soviet Union. BACEE has played an honoured and honourable role, which history will remember proudly, in the liberation of that region.

Lord Davies of Oldham: My Lords, I beg to move that the House do now adjourn during pleasure until 8.20 pm.

Moved accordingly, and, on Question, Motion agreed to.
	[The Sitting was suspended from 8.05 to 8.20 pm.]

Pensions Bill

House again in Committee.

Baroness Hollis of Heigham: moved Amendment No. 38:
	After Clause 8, insert the following new Clause—
	"Workers without qualifying earnings: employer contributions
	Where a jobholder elects to make pension contributions on that proportion of earnings which are £5,035 or less, the employer shall contribute in the same proportion as for earnings above £5,035."

Baroness Hollis of Heigham: The amendment standing in my name and that of my noble friend Lady Dean is a probing amendment. I am confident that it is virtuous; I am equally confident that it is technically deficient, but as it is probing, the second problem may matter less than the first.
	This amendment is about the £5,000 range of earnings that is not taken into account in personal accounts, which have been mentioned several times today. They will raise 8 per cent— that is, 4 per cent from the employee, 3 per cent from the employer and 1 per cent from tax relief—on all earnings, broadly speaking, within the income bands of the lower earnings limit—LEL—at just over £5,000, and an upper earnings limit, which was originally judged to be aligned with UEL, although that has now become more complicated.
	That has the advantage of aligning personal accounts with basic state pension, unlike the standard defined contribution schemes—money purchase schemes—that, as far as I am aware, cover all earnings from the first pound onwards, although they may cap in some cases at the top. We can understand why that de minimis of the LEL was introduced for personal accounts because the main beneficiaries are likely to be low-paid, part-time women often in several micro jobs. It did not make sense for them to contribute to a personal account while being disqualified from access to a basic state pension, which would then have meant that their BSP was incomplete, and they could have lost their personal account pound for pound under some scenarios.
	With the help of your Lordships on Report, I hope to persuade the Government, if they are not already persuaded, that we must reverse that situation on buying back missing years of BSP. Because of the alignment with BSP, the first £5,000 of earnings in personal accounts are not covered for pension purposes. It makes sense, given BSP rules, for some women where all of their jobs are below the LEL, even though they may find themselves in a hard-luck position. I understand the administrative complexity. Given the 30-year rule, after April 2010 and, I hope with the support of the House, a change in buy-back rules, this would matter less as more women will have a full basic state pension.
	Of course, it seldom matters for men, who will have a basic state pension of 30 years, because most of them expect to work for 40 or even 44 years and beyond. That is why the Government sensibly permitted people—particularly women—to make voluntary contributions into personal accounts to cover the first £5,000 of earnings. This is particularly useful for women who have built up a decent pot through working full-time, but who then, because of their caring responsibilities, need to cut their hours and their pay, while wishing, perfectly sensibly, to protect their pension. However, no employers are required to match those voluntary contributions on the first £5,000. Again, this makes sense if a woman has several microjobs, none of which takes her above the LEL. How employers would sort that out, I do not know. This amendment does not seek to help those employees, but applies only to those whose job or jobs take them above the LEL.
	When a woman is on half median earnings—£11,000 a year—only half her pay qualifies for pension contributions as of right. Effectively, her employer is not contributing at 3 per cent, but pro rata at 1.5 per cent—unlike the average 7 per cent in a conventional DC workplace pension. Even worse is the situation of a woman with multiple jobs. I gather that 350,000 people have multiple jobs over the LEL and are not in pensions. Who are they? They are highly likely to be women putting together a portfolio around childcare or elder care, with two modest jobs, one of them while the children are at school, the other perhaps later in the evenings or at weekends when their partner is around to help with the children. Equally, they may be younger people—writers, musicians, actors—fitting in shorter-hour jobs around their primary passion. If one of those young people, or a woman with childcare or elder care responsibilities, had two £6,000 jobs, she would get a pension contribution of only £1,000 on each of those jobs—£2,000 in total contributing to her pension fund. If she had one job at £12,000, the employer and she would be contributing on £7,000 in a personal account; or, if she was in a DC scheme, they would both be contributing on £12,000 in a personal account. So, it is £2,000 if you are in two £6,000 jobs; £7,000 if you are in one £12,000 job with a personal account; £12,000 if you are in a DC workplace scheme. This amendment says that where an employee with a personal account over the LEL wishes to contribute a percentage of her pay to cover the first £5,000, the employer must likewise contribute his 3 per cent. The noble Lord, Lord Skelmersdale, was exceedingly helpful earlier when he reminded the House that pensions are deferred pay. However, women on half median income with personal accounts are only going to get half their deferred pay reflected in pension contributions.
	Why do I hope that your Lordships will support the principle of this amendment? First, we already accept the principle that the employer, if he has a scheme, must contribute to a pension if the employee is aged between 16 and 22. We have teased that out already. The principle that an employee's voluntary contribution must be matched by the employer is not new. That is in the Bill and we discussed it earlier. Secondly, the employer already does this in his own DC scheme. He expects to cover the full range of earnings; from £1, not from £5,036. The amendment would establish a more level playing field between the two and might even discourage him from levelling down. After all, in his own workplace pension scheme, he not only covers the full £12,000, but also puts in a higher contribution of 7 per cent on the whole of that £12,000, rather than the 3 per cent on half of that £12,000.
	Thirdly, no one is talking about large sums. They will not represent a burden on business or bankrupt small employers. I calculate that it would cost up to £150 a year extra for employers—£3 a week—and £200 a year extra for employees. However, it could make all the difference in terms of outcomes, because it would effectively double the pension pot. For example, with 10 years' savings in a personal account at 8 per cent and on half median earnings of £11,000, the woman's pot would be £10,000 and not £5,000 after 10 years. After 20 years, she would have a pot of £27,000 instead of £14,000. After 30 years, she would have a pot of £53,000 and not £27,000. After 40 years, she would have a pot of £93,000 and not £48,000. Even 10 years' worth of savings produces capital of £10,000 to take into retirement and, at 30 years, an additional weekly income of nearly £80 to add to a full state pension and S2P would mean that someone on half median earnings would go into retirement with a replacement income of 100 per cent of their working life income. Therefore, there would be no problems with IRBs or means-tested benefits, and probably without the pressure of children and possibly with the mortgage sorted, she would be more comfortably off than ever before.
	I think that the proposal is a price worth paying. We have established the principle; the cost would be modest; and the long-term investment roll-up for employees, particularly for women in poorer paid jobs, would be immense. It would not be onerous to employers; they already expect to do that in their own DC schemes at double the contribution rate for the full range of earnings. Therefore, I hope that my noble friend will think seriously about what we are saying to women. One of the biggest risks to women of taking on personal accounts is the fact that very little of their earnings may be covered by pension contributions and, as a result, they will have false expectations of safety and security in retirement. That could be avoided if my noble friend were minded to follow through on the principle of the amendment. I beg to move.

Lord Oakeshott of Seagrove Bay: We like the amendment. The principle seems very fair and the noble Baroness made a powerful case. It is essentially an issue of justice for lower-paid people, particularly women. My honourable friend Danny Alexander strongly supported this issue in the other place. We look forward very much to hearing from the Minister, but clearly the question is whether this will lead to considerable extra costs and administrative burdens for PADA or for employers. I hope that the Minister will be able to give us some detail and figures on that if he resists the amendment, and in particular I hope that he will not just say, "This is the bargain we struck", or, "It was a deal". If there are problems, I hope that we can hear in detail what they are and why they exist.

Baroness Howe of Idlicote: I strongly support the amendment. The whole Bill is based on the need for flexibility—above all, to meet the needs of today's world. I make no pretence of denying that I am concerned, in particular, with how the proposal affects women. It affects them considerably with the range of jobs that they have and so on. With the cost of an extra £150 a year for the employer and the considerable gains that would ensue, there is a completely irrefutable case for the proposal, and I very much hope that there will be no doubt about the Minister accepting the amendment.

Lord Skelmersdale: I say straight away that I agree with the noble Baroness, Lady Hollis, that those who will be disadvantaged by the lower earnings limit are a key target for personal accounts policy. No one can doubt that. The Government have said that they estimate that around 350,000 individuals have multiple jobs, earn a total annual income of over £5,000 and do not currently contribute to a private pension. Like the noble Lord, Lord Oakeshott, I urge the Government to firm up on those figures because, as I said, they are an estimate. However, it is clear that a significant minority of these people—however many there are—will be women, for exactly the reasons that the noble Baroness, Lady Hollis, has just given us.
	It has been put to us that amending the use of the lower earnings limit so that it is retained for auto-enrolment but removed for contributions, will solve both the insubstantial contributions problem and the multiple jobs problem. The lower earnings limit of £5,035, combined with auto-enrolment, will create a scenario, we are told, where inappropriately small amounts will be contributed to personal accounts. Trivial contributions will be of limited use to savers and will be disproportionately expensive to administer.
	Secondly, the Bill rightly requires a separate application for each employment. However, the use of the lower earnings limit means that people holding multiple jobs will not receive employer contributions on the first £5,035 of their earnings in each separate employment, even if they were to enrol into a scheme with each employer. That clearly disadvantages those with multiple low-paid jobs. It is suggested to us that the lower earnings limit will remain as the point at which employees become auto-enrolled. However, there will also be the option to opt in to the scheme on earnings less than that and receive employer contributions. That is the whole point of the noble Baroness's amendment. All savers would receive employer contributions from zero, rather than from £5,035. That reduces the potential for inappropriately small balances to arise. The minimum contribution at 8 per cent for auto-enrolled scheme members would, I understand, be about £8 per participant per week.
	I mentioned earlier in our discussion my worries about costs of auto-enrolment to small and medium-sized enterprises. I understand that small business groups are beginning to come round to support the proposal, as the small contribution cost would be compensated by the significant reduction in administrative complexity. However, the important thing is that they are not there yet, so I am glad that this is a probing amendment at this stage—especially as small employers who do not currently have schemes are the ones who may very well object, because it will cost them quite a lot of money to create schemes.
	There is another problem that the noble Baroness did not mention with those ladies—usually ladies anyway—employed as housekeepers, daily cleaners and what have you, who would fall under the amendment. I am sure that the Minister will correct me if I am wrong, but I think that that would mean that those employers would have to contribute to the personal accounts scheme at the 4 per cent level. I repeat what I said—the noble Baroness, Lady Hollis, approved of me saying it—pensions are deferred wages. Honestly, I believe that the jury is out on the amendment and we will see whether there is general agreement among small and medium-sized enterprises, especially those that do not currently have schemes, that they could come on board. If not, I rather think that this will be a no-no.

Baroness Dean of Thornton-le-Fylde: I support the amendment, to which my name is attached. As one would expect, my noble friend Lady Hollis has covered the amendment in substantial and correct detail.
	This is a probing amendment. It is not ideally worded. The difficulty that both my noble friend and I are working under is that the Minister does not appear to accept that this is an issue and that we should work jointly to find a way through it. We have not crossed that principal point at the moment. If we had, perhaps we could find a way to deal with this in a more equitable and better way than the amendment.
	At Second Reading, the Minister said that we know that about 400,000 individuals will be caught by the £5,000 ceiling gap. That is not a static 400,000. I could understand it more if there were a reducing number, but there is not—it will replenish itself as people move out of the marketplace.
	Pensions Bills do not come along very often, and this one is a very good attempt by the Government to eliminate some of the inequities that we have had over the years in pensions. That is to be applauded. But the Bill would not be doing its job if it just left 400,000 people without any pension protection. I will be interested to hear what the Minister says. I will listen in particular for an acknowledgement that this problem is difficult to work through and that the Government are prepared to discuss and work through it to a solution which, while it may not be ideal, is a step in the right direction. At the moment, 400,000 people have nothing to hope for while they work in one or more jobs that pay an income of less than £5,000 a year. I support this amendment.

Lord McKenzie of Luton: I thank my noble friend for this amendment and as ever, the challenge that comes with it. I say to my noble friend Lady Dean that the Government see this as an issue about how people on low pay, particularly women, can be best supported and how the pension system might be made most relevant to them. Let me also deal upfront with this issue of multiple jobs. Sometimes we conflate a number of issues. Somebody can have multiple jobs because of seasonal work where the jobs are consecutive; you can have jobs that are concurrent or overlapping. They do not necessarily lead to the same result. Somebody who had a job for six months on £4,000 a year and a second job in a second part of the year for £4,000 would have, in broad terms, the same outcome as a person with a job paying £8,000 a year. It depends on pay reference periods; it depends on fluctuating earnings; it depends on whether there are waiting times for any of the schemes involved. We need to unpick that issue as well.
	Similarly, somebody might be on low but bunched earnings—they would earn £3,000 a year but would do so over a three or four-month period. Depending on the pay reference period of the employer, they would enter into an auto-enrolment situation. We need to unpick that. My noble friend gave me a particular challenge. My briefing is based on the assumption that those people who opted in, because they did not have qualified earnings, would bring with them an employer contribution. The proposition that I believe is being advanced is that those who have qualifying earnings are in, but choose to pay contributions on the first £5,000 and not just on the band of earnings. That should attract an employer contribution. Will my noble friend clarify that for me? Obviously, different issues arise from that. Is my noble friend saying that those people who do not reach the qualifying earnings threshold, but who have a right to opt in, can also, when they opt in, have a right to bring with them an employer contribution; or is my noble friend saying that if you have qualifying earnings above the threshold, contributions should be payable by the employer, not only in respect of that excess but from £0?

Baroness Hollis of Heigham: I am sorry if I was less than clear on that. I was trying to exclude people whose earnings in a particular job were below the LEL. For all sorts of reasons, this could end up with someone having half a dozen microjobs as a cleaner. You could not start adding them all up and then try to divvy up an employer contribution between five or six employers. Where somebody has a job that gives them qualifying earnings above £5,035, if they choose to make voluntary contributions on that first £5,000, just like 16 to 22 year-olds, that should automatically attract an employer contribution as well, so that the whole sum of the earnings can be taken into account for pension purposes. Therefore, there is potentially an equal playing field between a person on a job of £12,000 a year and somebody with two jobs of £6,000 a year.

Lord McKenzie of Luton: I thought that was the import of the amendment, which means I can probably disregard most of my script; it was written on the basis that the amendment would enable people who opted in because they did not have qualifying earnings to bring with them an employer contribution. I should put our response to that on record in any event. If you were to do that, you would effectively have to lower the starting point right across the piece, which would be incredibly expensive for employers—something like £1.9 billion extra each year in terms of employer contributions.

Baroness Hollis of Heigham: I accept any faults in drafting, but my amendment states: "Where a jobholder elects" or chooses,
	"to make pension contributions on that proportion of earnings which are £5,035 or less"—
	not all their earnings, but a proportion—
	"the employer shall contribute in the same",
	ratio or,
	"proportion as for earnings above".

Lord McKenzie of Luton: I accept that that is what the amendment states. Officials and I thought that its import was different. I thought that there was a drafting error in it as well, but I understand from what the noble Baroness says that it is correct. In that sense, there is a different issue to think through, which would look at somebody in a qualifying scheme where the contribution of the employer was based on a more traditional definition of earnings—basic pay—with that employer contributing from £0. The proposition in respect of personal accounts and auto-enrolment generally is that the earnings figure should be a different definition—a broader band. In making the comparison to qualifying schemes, we say that we are concerned about only the contribution levels, not how the calculation is done.
	I apologise for not being able to give a considered response, because we thought that the amendment was heading in a different direction. We need to work through where the balance lies for person A, whose employer currently contributes from £0 but on a different calculation of earnings. We say that that is fine, but the comparison has to be against somebody having contributions calculated on a band and a broader definition of earnings. We need to see the equality between those two situations.
	We need to take away and think through the proposition that my noble friend helpfully outlined tonight, which is different from the proposition that we examined. She and my noble friend Lady Dean recognised that trying to aggregate multiple jobs was a nightmare. The Pensions Commission looked at—we have done so too—all the issues about who would contribute what and who would have responsibility for paying into the scheme, particularly when you have two or more employers with different schemes, different pay reference periods and fluctuating earnings. It would be an administrative nightmare and is not something that has been accomplished. I would like to take away and think through the different issues that my noble friend Lady Hollis has raised tonight—without any commitment, of course—as we need to explore some of them.

Baroness Hollis of Heigham: It is probably the first time that I have been criticised for an amendment that might be correctly as opposed to incorrectly drafted, which seems to be my noble friend's line. However, as my late husband used to say, what you need to know about people is whether they like their compliments forehand or backhand; I think that probably counts as backhand.
	I am grateful for the support all round the Committee and the thoughtful contributions from these Benches that I would expect. I also thank the noble Lord, Lord Skelmersdale, for his thoughtful contribution in trying to weigh up some of the options. He made a point about housekeepers, which went back to the point made by my noble friend about complexity. The amendment increases simplicity. The proposal would apply only if you had earnings that took you above the LEL. You could make voluntary contributions below it, and only that would trigger the employer contribution. If the housekeeper earned less than £5,000, the situation is as now. If the employee was earning £8,000, the employer would have to make pension arrangements that, currently, bring the £5,000 to £8,000 under personal accounts, and for the extra £150 per year, would do it on the first £5,000 as well. In that sense, it is very simple. Employer and employee pay a pension contribution in the same way that tax and national insurance are calculated. Pension contributions are calculated on earnings from £0, even though there may be exemption bands, as there are for taxation or national insurance purposes. There will be simplicity of alignment between what now happens in DC schemes and what happens in personal accounts.
	My noble friend rightly made the point that DC schemes have a different basis. They operate according to basic pay, rather than qualifying earnings. Some helpful statistics have come from Standard Life. I have not been able to verify them but have no reason to think that they are incorrect. Only 3 per cent of women's earnings, and 8 per cent of men's, are not basic. For most women, particularly, the gap between basic earnings, on which DC schemes are calculated, and qualifying earnings, on which personal accounts are calculated, is minimal, if there is a difference at all. This comes into to the debate on qualifying earnings, which we may have later. Qualifying earnings will obviously include the occasional hour or two of overtime in retail, but most women are not in the commission-heavy territory of, say, car salesmen, as some men are and where a bigger problem arises.
	I was heartened by my noble friend's recognition that this is an issue where we could, with consent—I hope—take the industry forward with us. We are not dealing with big sums, but it could transform outcomes for lower-paid women. This will make a significant difference to the ability, as a result of personal accounts, to float women off the means-testing advice conundrum, which we are all rightly concerned about. I am cheered by my noble friend's words. I am sorry that my drafting was correct. Next time I will make sure—intentionally, as well as unintentionally—that it is incorrect; that way we will have a level playing field. Under the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 9 [Information to be given to jobholders]:

Lord Skelmersdale: moved Amendment No. 39:
	Clause 9, page 6, line 3, leave out paragraph (c)

Lord Skelmersdale: This is yet another probing amendment, this time to ascertain who the prescribed person is to be in Clause 9, which covers advice to jobholders. It could, after all, be the Personal Accounts Delivery Authority in the first instance of personal accounts. I hope that it will not be, because the trustee should be up and running by the first enrolment date. I hope the Minister will be able to confirm that, as far as he is currently able, given that PADA has not yet got to grips with the trustee issue, except in the most general terms.
	It could be the employer, but given that only in extreme cases will they be registered under the FSA, he can hardly be expected to explain the information to employees and not be criticised when he gives the wrong advice. It could also be the scheme manager, which would apply to personal pension schemes or occupational pension schemes. Who is the registered person in this clause? On reflection—and we have all had plenty of time to reflect, even the Government, as their amendments in the Marshalled List show—I rather wonder if it would not be a good idea to add a new paragraph to subsection (2). That would then read:
	"Regulations under this section must state—
	(a) what information must be given;
	(b) in what circumstances it must be given;
	(c) how and when it must be given"—
	and the new one would be:
	"(d) by whom it must be given".
	Alternatively, if the Government have already decided this, there is no reason that I can see why "by whom" should not be in the Bill.
	Another point occurs to me: will the information be sent directly to the employee by the prescribed person or will someone else, such as the employer, be expected to pass on the information to the employee? That is a repeat of the post-box scenario I mentioned before dinner, but of course it applies in a totally different context. Further, we have not talked much about agency workers so far. Who does the Minister believe is the employer in that situation? Is it the agency or the temporary employer? Incidentally, I might well have asked that question during our debate just now on the amendment in the name of the noble Baroness, Lady Hollis. It does not matter when the answer is given as long as we get it before Report. I beg to move.

Lord McKenzie of Luton: Clause 9 recognises that individuals will need access to relevant and accurate information about the effect of the new employer's duty in relation to them, and I shall begin by making it clear that the information prescribed under Clause 9 is over and above the information that will come from a scheme as this information is already prescribed in existing legislation. Regulations made under Clause 9 will set out what information must be given, under what circumstances, how and when it should be given, and by whom. We recognise, for instance, that individuals will need to know whether they are eligible for automatic enrolment, the name of the scheme they have been enrolled into, and their right to opt out and how that can be done. The Bill as drafted has been kept quite flexible because many of the decisions regarding who should provide what information have yet to be finalised. I know that this is a constant theme of our discussions and will continue to be so, but that is genuinely where we are.
	The Government want to ensure that individuals receive the right information at the right time and in the most appropriate format. We plan to build on existing information provision and complement current sources which include, as we discussed earlier, organisations such as citizens' advice bureaux, the Pensions Advice Service and the Financial Services Authority. It would be premature to predict how we should best go about this without consulting widely. Under existing legislation, schemes already have to provide a wide range of information to prospective and active members. For example, prospective members will receive information to help them determine whether they might want to join the scheme, and active members are provided with a full annual illustration of benefits at retirement. The personal account scheme will be subject to the same legislation as any other money purchase occupational pension scheme and the Pensions Regulator will be responsible for information about how employers can discharge their new duties. It is expected that PADA will provide information to employers on the scheme.
	Employers will have a role in providing information to employees, not least what scheme they have been enrolled into and their right to opt out. However, as I have said previously, we are mindful of burdens on business and will bear this in mind when we make decisions about the most appropriate channels to use when providing information. We want to work with stakeholders to consider in more detail the appropriate person or body to deliver this information and to ensure that its delivery is customer focused and business friendly.
	Turning to the amendment tabled by the noble Lord, Lord Skelmersdale, this would remove the ability of the Secretary of State to prescribe who provides this information. Not prescribing who is responsible for providing what information would inevitably create uncertainty. I do not think that that was the intention behind the amendment but there is such a risk. We need to be sure that individuals are clear about the effect of the new employer duties. Let me reiterate that we will determine who is best placed to provide information by consulting stakeholders and expert organisations, along with individuals themselves. In addition, the regulations will be sent out for consultation.
	The noble Lord asked specifically who is the employer of an agency worker. It is the person who has responsibility for paying the individual. That is one of the provisions in the Bill.

Lord Skelmersdale: Yet again I am grateful to the Minister, but he is beginning to become a little repetitive. At least I am asking the same question on different points, but his answers are almost identical. I am beginning to come to the conclusion that much of this Bill is being enacted a year too early. Of course it is quite right to bring forward all the PADA stuff, but no Minister in DWP is able to give answers to many of our questions for the simple reason, which I accept, that they do not know. I have commented on why they do not know several times today.
	However, the noble Lord said—I think I got his words down correctly—that there is information from the scheme under existing legislation. Where in the existing legislation? I think—I certainly hope—that the Government see the policy behind the Bill as a see-saw. On one end of the see-saw you have business and its interests; on the other end, you have savers, pension savers particularly, and up until now the see-saw has balanced exactly. I remember when I was first married my wife and I went to St James's Park and sat on a see-saw—and it did not move, much to my embarrassment and that of my new wife.

Baroness Hollis of Heigham: What moral did the noble Lord draw from that?

Lord Skelmersdale: That I needed to put on weight. I still do. I came to that conclusion—not with my wife but with the Minister—when he said that he intended the Bill to be as business friendly as possible.
	I am intrigued by his answer to my question about agency workers. He said that it depends on who does the paying, but very often two payments are made. For example, in the agricultural industry, one payment is made to the agency providing the workers, and the other is paid—on a daily or weekly rate—to the workers employed by the farmer or nurseryman or whoever it happens to be. I shall have to look into that.
	The Minister said there was provision in the Bill. Does he mean the agency workers Act—if that is what it is called—which we debated a year or two ago, or does he mean the Bill? He indicates that he means the Bill. I shall look at this issue extremely carefully. I am certain that the Minister does not have a clue about how to answer the main thrust of the amendment and so I beg leave to withdraw it.

Lord McKenzie of Luton: Before the noble Lord formally withdraws the amendment, perhaps I may pick up on a couple of points he has raised with me. He has described the policy as a see-saw. It has been very important to construct consensus and balance around this. I would describe it as being an equilibrium, and that is where we are. In our deliberations we need to be mindful of the consensus, which has been hard fought for and hard won, and I am sure it will be uppermost in our minds.
	The noble Lord asked me where in legislation are the provisions to deal with regulations on pension schemes. I understand they are in the disclosure of information regulations of 1996. Specifically on agency workers, I was referring to Clause 78 of the Bill, where, for the avoidance of doubt, there is a provision to identify who the relevant person is. That person is clearly specified as the person who is responsible for paying the agency worker in respect of the work. It is to avoid some of the confusion that arises in these arrangements that these specific provisions are there.

Lord Skelmersdale: I am grateful for that further clarification. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 9 agreed to.

Baroness Noakes: moved Amendment No. 40:
	After Clause 9, insert the following new Clause—
	"Protection for employers
	(1) An employer shall not be required to give advice to jobholders or workers, either generally or on an individual basis, in respect of their rights under this Chapter.
	(2) An employer who provides information in compliance with any regulations issued under section 9 shall not incur any liability to any jobholder or worker to whom the information is given."

Baroness Noakes: Amendment No. 40 inserts a new clause after Clause 9. The clause is entitled "Protection for employers" and deals with interactions between employers and jobholders in relation to automatic enrolment. I am inevitably dealing with one end of the see-saw to which my noble friend Lord Skelmersdale referred.
	The CBI's submission to your Lordships' House said quite clearly that employers must not be responsible for providing advice on savings. This has been echoed by other organisations; for example, the Association of Certified Accountants. The CBI says that it is the responsibility of the Government and the Personal Accounts Delivery Authority to provide advice. I am not sure that it is absolutely right since we do not expect PADA to be in existence much beyond the inception of personal accounts, but the Government certainly need to bear the primary responsibility.
	The Liberal Democrat Benches led an interesting debate earlier today in connection with Amendment No. 9 relating to the over-50s, a group which may need advice, but the problem is much wider than that. Employers are aware of the risks of being auto-enrolled into schemes from which their employees will gain no or insufficient benefit, but what employers are clear about is that it is not reasonable that they should be in the firing line to bear any risk related to that.
	My new clause has two subsections. The first says that employers are not required to give advice to jobholders or workers. They may choose to do so, that is entirely up to them, but they must not be required to. That is a declaratory thing that employers may find helpful. The second subsection says that employers do not incur any liability in respect of information given in accordance with Clause 9. We have just been discussing that clause. It gives the Secretary of State a wide power in relation to the giving of information. The only thing we have established so far is that the Government do not know what that will involve, which raises a lot of concerns for those who might end up on the receiving end of what these regulations may have in store.
	The boundary between information and advice is quite a fine one. One of the concerns is that the regulations, in setting information, may stray over that line into advice. Subsection (2) of my amendment effectively provides employers with a safe harbour if they comply with the Clause 9 regulations. The Minister has outlined that the Government will be taking advice from PADA. Generally there is a lack of clarity about what these information requirements will involve, in particular for employers. It is that lack of clarity that raises concerns in the minds of those acting on behalf of the business community. I hope that the Minister will see that my new clause provides needed reassurance to the business community, which will almost certainly have to bear the lion's share of the burden of implementing personal accounts on auto-enrolment. What they do not want to bear is any of the liability that might go with people ending up inappropriately in automatic enrolment. I beg to move.

Lord Oakeshott of Seagrove Bay: We think this is a good amendment. We are very much in favour of clarity where advice is concerned and it is clearly not the role of employers to give advice. We will obviously be even more sympathetic if, over the course of our discussions between now and Report, the Conservatives feel able to support us so we can work something out, making it quite clear that the responsibility for advice does not rest with employers but outside in a proper nationwide generic free service. That is not a joke. It has to be one or the other and it is very important that we have clarity that the responsibility does not rest with employers. It was interesting in our previous debate that the Minister was quite reluctant to cross the line between information and advice. We need to be very clear on that so we support this amendment.

Baroness Hollis of Heigham: Like others, I think this is a useful amendment, simply for its clarification. The Government intend only that employers will be a conduit for information, not providers of it. That is a useful distinction to draw.
	I have not worked the implications through, but we were quite glad to have the "in good faith" clause in at various points of the 2004 Bill. I wonder whether that could apply to an employer who provides information in good faith in compliance with any regulations issued. I say that because one thinks about some of the problems we have had of alleged misunderstanding or leaflets allegedly going astray. "In good faith" then becomes a reasonable defence. I was told on one occasion that it would be a reasonable defence even though it is not in the Bill, but it might give appropriate additional comfort if it were there.

Lord McKenzie of Luton: As explained, the proposed new clause seeks reassurance that we will not be asking employers to provide advice and to ensure that employers who provide information in order to comply with a regulatory requirement are protected from any liability should a jobholder bring a claim against them. We agree with the proposition.
	I can confirm that employers will not be required to give advice. The distinction between advice and information is important. I was not aware that I was reluctant to accept that distinction earlier; we think it is clear. However, there is no requirement now that people who join a pension scheme should receive advice, and that will not change with the introduction of automatic enrolment. Indeed, I go further: on the whole we do not believe that regulated advice will be necessary. The employer contribution will make the decision to save simple for most people.
	Some individuals may wish to seek guidance—for example, those considering paying off large, high-interest debt first—and that is the case for any financial decision. As I have said in response to a previous amendment, we may require employers to provide basic information to workers, such as which scheme they have been enrolled in, but not to provide advice.
	On the issue of liability, the proposed new clause aims to protect from any legal claims employers who provide information to jobholders. The employer will only ever be required to provide information of a type that we will prescribe in regulations. They will not be required to comment on the information provided. It is therefore difficult to envisage how an employer could be held liable for an individual's decision to remain in pension saving, given that the actions they take relate simply to fulfilling a statutory duty. Furthermore, holding an employer liable is particularly unlikely as the individual will receive information from the scheme on an ongoing basis about their savings and will be in a position to opt out at any time.
	I hope that offers the reassurances that the noble Baroness requires, but I suspect it does not. I think that she and I are on the same page in what we believe to be the position and what the outcome should be, but it is not necessary to put that in the Bill in the terms of the proposed new clause.

Baroness Noakes: I thank the noble Lord, Lord Oakeshott, and the noble Baroness, Lady Hollis, for their support for the amendment. I am disappointed that the Minister, while professing to be in the same place in respect of the substance of the amendment, did not find it appropriate to say that the Government welcomed the idea of an amendment. The first of the subsections, which is about not requiring advice, was meant to be declaratory so that there could be no misunderstanding of the role of employers and I can see that it might be regarded as otiose.
	I am much less clear about the issue of providing information in connection with Clause 9. Subsection (2) of my proposed new clause was designed to give a safe harbour to employers so that they would willingly, without reservations and caveats, take part in their obligations under Clause 9 when the regulations are laid. The Minister said that it was unlikely that they would have liability, but "unlikely" is not quite good enough for employers. I entirely take the point that the noble Baroness, Lady Hollis, raised about qualifying "in good faith", or words of that nature. It goes without saying that you do not take safe harbour without having those kinds of sentiments that are associated with it, which may or may not be imported as a matter of law.
	This is an important issue for employers. Employers have been painted today as being on the whole rather a bad lot. The amendment tries to reflect that employers recognise that they will have to comply with some quite extensive provisions but that their interests should in some way be protected as they come to implement them. I will want to return to the matter on Report, because it is important. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 10 agreed to.
	Clause 11 [Introduction of employers' duties]:
	On Question, Whether Clause 11 shall stand part of the Bill?

Lord Skelmersdale: Clause 11 is about a possible postponement of the employers' duties. We had an interesting probing debate on Clause 4, which appears to do much the same thing in providing for the possibility of delaying initial automatic enrolment in circumstances described in the regulations, about which we know nothing—nor will we until well after the Bill is enacted. I therefore ask the Minister why the power in Clause 4 is not enough. Why cannot the two clauses—to use a phrase that he has just used—be conflated? To what kind of employer will the power apply? When do the Government envisage using it? I am even more confused by this clause, which is not clarified by the Explanatory Notes, than I am by Clause 4. I hope that the Minister will be able to relieve my mind and perhaps even educate me.

Lord McKenzie of Luton: I shall do my best to relieve the mind of the noble Lord, Lord Skelmersdale, but I would not presume to educate him on any matter. Clause 4 deals with a matter that is quite different from that in Clause 11, which relates to a power to stage the introduction of employer duties. It allows the Secretary of State to set regulations that stagger the commencement of the employer duties, including those relating to automatic enrolment. The regulation-making power will enable us to require different groups of employers to start to discharge the duties at different times.
	Staging the rollout of the employer duty will facilitate a smooth take-on of employers by the Pensions Regulator and pension schemes, including the personal accounts scheme. Staging will also allow a gradual increase in the volume of employers undertaking the duties, which will in turn assist delivery bodies and schemes in refining business processes in the light of operational experience. These processes will have been carefully considered and pre-tested ahead of launch, but, as with any project of this size, it is only sensible to build in opportunities for ongoing improvement in the rollout plans.
	It is crucial that the personal accounts scheme is able to cope with the take-on of potentially large numbers of members in the early days. Latest analysis estimates that 1.3 million employers will be affected by the reforms. The leading option for staging is by business size. The clause also gives the Secretary of State the flexibility to choose staging by reference to one criterion or a combination of different criteria. While business size is our preferred option, we would be able to use the regulation-making power flexibly to ensure that the staged introduction of the duty was done in the most sensible way. We will work closely with key stakeholders to help us to determine the best option.
	It has always been our intention to introduce the reforms from 2012. That is still the case. I am aware that it was suggested in the other place that, because Tim Jones wanted to be satisfied that plans were deliverable, he must have had reason to believe that they would not be achievable. That was not the case. It was quite natural that he wanted to be assured that the plans that he inherited were deliverable by carrying out a review. I hope that I have been able to explain the purpose of Clause 11 and I urge that noble Lords agree that it stand part of the Bill.

Lord Skelmersdale: When the Minister gave me the opportunity the other day to quiz the chairman of the Personal Accounts Delivery Authority, that was most certainly one of the questions that I asked him—whether he believed that this scheme would indeed come into operation, as the Government fully intend, in 2012. His answer was in the affirmative. The Minister has just repeated that message.
	I thought that we were going to start with a big bang; I had not appreciated that the Government intend a rollout of employer duties, whereby, by definition, there will be different categories of worker enrolled in the scheme at different periods. The Minister has now told me that this is to help the 1.3 million employers that the Government believe to exist. They intend, therefore, to stage by business size. It might also be staged by the type of existing scheme, if any. I can think of various possibilities. That is extremely helpful and clears up what was obviously a misunderstanding in my mind. I am grateful to the Minister.

Clause 11 agreed to.
	Clause 12 [Qualifying earnings]:

Lord Skelmersdale: moved Amendment No. 40A:
	Clause 12, page 6, line 32, leave out paragraph (a)

Lord Skelmersdale: We have already had reference to the lower earnings limit at £5,035. By setting the start contribution facility of personal accounts, as it were, the Government are excluding those jobholders who have several part-time jobs, to whom the noble Baroness, Lady Hollis, just referred. This group is largely composed of those workers whose saving habits the Government claim to be most concerned about: women, low earners and those with a lack of job stability.
	In spite of the Minister's answers to the noble Baroness, Lady Dean, who is no longer in her place, and the noble Baroness, Lady Hollis, I fail to understand why the Government have decided to exclude this group. I also do not understand why the lower earnings limit was the appropriate level at which to start paying pensions contributions. How many people whose total earning is above £5,035 do they estimate will be excluded? We have had some figures, but I am not sure that they are appropriate on this occasion.
	The other point is about administrative complexity. By calculating only qualifying earnings from £5,035, the Government are imposing a great deal of administrative complexity on employers who already provide a pension but currently count all the earnings. I shall not repeat what we said on the amendment tabled by the noble Baroness, Lady Hollis. I beg to move.

Lord Oakeshott of Seagrove Bay: This really does seem to be déjà vu, does it not? I look forward to hearing the Minister read out what he half read out in response to the noble Baroness, Lady Hollis—and clearly really wanted to read out. I am sceptical about this amendment, to be honest, for reasons that the noble Baroness gave when she explained why it was not her amendment.

Lord McKenzie of Luton: I thank the noble Lord, Lord Skelmersdale, for the amendment. Qualifying earnings will be calculated on earnings between £5,035 and £33,540, in 2006-07 earnings terms. The limits of the earnings band will be up-rated from its 2006-07 base, in line with changes in average earnings, to ensure the value of pension contributions keeps pace with individuals' earnings. We shall have the opportunity to discuss that under a later amendment.
	The qualifying earnings band has two functions: first, the lower limit determines whether a worker qualifies to be automatically enrolled; and secondly, to establish the minimum necessary contribution to be made for each pay period thereafter, for those workers who participate, in the case of money purchase schemes.
	The issue of pension saving for those on very low earnings is clearly a difficult and complex area. Our decision to use an earnings band is based on research done by the Pensions Commission. In designing the reforms, the commission focused on the importance of replacement rates. For those on low earnings, the state system is designed to provide them with high replacement rates, which calls into question the appropriateness of workplace pension savings for this group. This is why, in designing this reform, we have ensured that those on very low incomes will not be automatically enrolled into a pension and are not incentivised to save by the presence of an employer contribution.
	In 2006-07, £5,035 was the threshold at which most workers became liable for statutory deductions—that is, national insurance contributions and so on. Removing the lower earnings limit would have the effect of making the employer contribution payable on earnings from pound one. This has an estimated cost of around £1.9 billion a year, increasing total employer contributions from £2.9 billion to £4.8 billion a year, a cost which I would hope that the noble Lord recognises makes such a proposal prohibitive. The earnings band for both employer and worker contributions is a key plank of the Pensions Commission's recommendations. Removing the lower limit would unpick the core policy and the consensus on which we touched earlier, on which the reform is predicated. This, combined with the additional employer burden, leads me to ask the noble Lord not to press this amendment.

Lord Skelmersdale: When I get to read Hansard, I shall have to compare that answer to the one given to the noble Baroness, Lady Hollis, because the answers were not quite the same, as I recall.

Lord McKenzie of Luton: In what respect would the noble Lord say that the response conflicts with my response to my noble friend?

Baroness Hollis of Heigham: Perhaps I can help my noble friend and the noble Lord, Lord Skelmersdale. I would love to have run with an amendment that covered as of right all earnings from pound one, irrespective of whether in each individual employment it was capped above or below the LEL. In other words, somebody who has five jobs of, say £2,000 or £3,000 each, which together bring in an income of £15,000 would nonetheless have a pension contribution by an array of employers matched by the employee. I would have loved to have done that. I do not think it is viable as it does not adequately yet reflect the role of the basic state pension.
	We do not allow people to sum their hours together if they have multiple jobs below the LEL. We do for tax credits—this is what is batty about the system—but not for the basic state pension. People may have half a dozen micro jobs—perhaps gardening, cleaning and so on—and the implications of trying to track pension contributions through on £1,000 a year or £40 a week, just seems to me too complex, much though I would like to see it happen. That is why in my amendment I went for a less generous amendment than that the noble Lord, Lord Skelmersdale, which is that you have to have earnings of £5,000, but that if they exceed that you could elect and then require maximum contributions from the employer for the first £5K because you would already be in the system. So I went for the administrative simplicity and what I thought was the feasibility of that amendment rather than the more generous amendment moved by the noble Lord. That is why I suspect that my noble friend's reply is rather different this time.

Lord Skelmersdale: That was interesting. Of course the difference between the amendment of the noble Baroness, Lady Hollis, and my amendment is that hers was for real and mine was for probing. With which thought, with permission, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Noakes: moved Amendment No. 41:
	Clause 12, page 6, line 32, leave out from "than" to end of line 33 and insert "the annual equivalent of the amount of the primary threshold, and
	(b) not more than the annual equivalent of the amount of the upper earnings limit.
	( ) The primary threshold and the upper earnings limit are the amounts set under section 5 of the Social Security Contributions and Benefits Act 1992 (c. 4) for the tax year in which the pay reference period commences."

Baroness Noakes: Amendment No. 41, for the avoidance of doubt, is a probing amendment. It is the first of a couple of amendments which seek to find out what the Government's policy is in relation to the band for qualifying earnings. The curious amounts in the Bill are the 2006-07 primary threshold and upper earnings limit for national insurance contributions purposes. We understand those are to be uprated in line with earnings.
	The Pensions Commission originally proposed using the national insurance top and bottom limits for the band of earnings, and the Government in their first White Paper said that they agreed with the Pensions Commission that the band proposal was about right. In the December 2006 White Paper, the one which set out more detail about personal accounts, they said—and this is in a footnote to paragraph 6.3:
	"When launched, the limits for the personal accounts earnings band will be aligned with the Primary Threshold and Upper Earnings Limit for National Insurance contributions".
	That implies that in 2012 this scheme would be picking up the then primary threshold and upper earnings limit. Since December 2006 we have had the now infamous 2007 Budget—infamous largely because of the ill-judged attempted abolition of the 10 pence tax rate. One way of paying for that particular package is to raise the upper earnings limit of national insurance—as the Minister well knows because we are debating that in the context of another Bill—to the higher rate threshold for income tax purposes. So the upper earnings limit is rising quite a lot.
	I ask in these amendments whether the Minister will set out for the House what policy now drives the setting of the qualifying earnings band. At the bottom end will it be linked with a primary threshold? If it is going to be the primary threshold in 2012, that is unlikely to be the same thing as setting the 2006 level uprated in line with earnings, because if the primary threshold remains in line with the personal allowance for income tax purposes the two will have diverged. Similarly at the upper earnings limit level it is likely to be raised to beyond the level that would be achieved by indexing 2006-07. So this is a probing amendment to invite the Minister to set out their policy, if indeed they have one for this. I beg to move.

Lord McKenzie of Luton: I thank the noble Baroness for giving me the opportunity to set out the Government's policy on this matter. As we have already discussed, these reforms have been structured to set a median earner on course to achieve an income in retirement of around 45 per cent of their working-life earnings, in line with the Pensions Commission's recommendation.
	The qualifying earnings band establishes a link between working-life earnings and pension saving. We selected the primary threshold and upper earnings limit for national insurance contributions in 2006-07 as the starting limits for the qualifying earnings band. These limits avoid automatically enrolling people on very low earnings, for whom state pensions already provide high income-replacement rates, cap compulsory employer contributions at the upper end and help focus these reforms at job holders on moderate to low earnings.
	Having made this important link between earnings and pension savings, we need to maintain it. That is the key driver. We recognise the administrative simplification that sticking with the national insurance thresholds would provide. However, as we know, not all earnings bands are uprated by changes in average earnings. The upper earnings limit was increased in the 2008 Budget as part of a programme of tax simplification. This change would have widened the qualifying earnings band for pension saving had we at that point retained a link to the national insurance limits and significantly increased the costs to employers.
	As the noble Baroness acknowledged in our discussions on the National Insurance Contributions Bill, we have confirmed our aspiration to relink the primary threshold with personal allowances and the upper earnings limit with the point at which higher rate tax is payable. Once aligned, the working assumption is that these are more likely to be uprated by prices than earnings. Indeed, the noble Baroness pressed an amendment on us to that effect in Committee. That would mean there would be a divergence of the increase in those bands by prices and the increase in these bands by earnings; therefore, we would have broken the link with earnings relationship, which is the important component of this measure, to ensure that we reach the 45 per cent replacement rate in retirement.
	We recognise that this policy means that employers will have to work with a new earnings band. However, payroll software will be able handle the calculations with ease. I hope that that has explained our policy to the noble Baroness.

Baroness Hollis of Heigham: Does my noble friend have access to any formal projection of stats on this? I can see why it may happen, but I am not persuaded that the loss in cleanliness of structure is necessarily worth the worries that he suggested. It would be very helpful for my noble friend to provide forward projections on the increasing non-alignment of this cap, as against the alignment of the UEL with the upper tax threshold, so that we can see how they begin to diverge, particularly given that a £3,600 cap on 8 per cent contributions cashes out at about £45k, I think. That should provide plenty of head space for the sort of alignments that the noble Baroness was talking about. Can my noble friend help by writing to us more fully?

Lord McKenzie of Luton: I am happy to write and provide any stats we have. However, I reaffirm the principle that if we aligned to the upper earnings limit in the primary threshold—and those are generally uprated by inflation Rooker-wise and by everything that went with it—there would be a potentially growing divergence, on the assumption that earnings are generally ahead of prices. Over time and the longer term, there could be a considerable divergence between those thresholds and the thresholds that we are considering when they are updated by earnings. I do not have data for the top end, but as regards the lower threshold, in 2012—these are in 2006-07 earnings terms—the amount would be £5,035. It would be the same in 2030-40 in current earnings terms. If we uprated that band by prices, by 2040 the £5,035 would have reduced to £2,890 and we would be back with the problem of potentially incentivising people into pensions for whom the state was providing a better replacement rate. That is why we think the link with earnings is particularly important. I am happy to share the data with my noble friend and other noble Lords.

Baroness Noakes: I thank the noble Baroness, Lady Hollis, for her comments and the Minister for his reply. He has confirmed that while the December 2006 White Paper said that when launched the national insurance limits would be picked up, the Government are not planning to do that. They are planning to start in 2006-07 an uprate by earnings.
	The Minister says, "Well, payroll software can handle that". This is a curious policy. The Government have just started on a process that is having a bit of a hiccup this year because they screwed up the 10p tax rate. The policy was to harmonise national insurance and income tax. Here we have a completely different set of rates overlaid on that, which will make it complicated for employees to understand the point at which they start paying tax, national insurance and pension contributions, so the cleanliness referred to by the noble Baroness, Lady Hollis, has been removed.
	The complexity is considerable for employees, and it is something that we want employees to relate to and understand. It is too easy to say that payroll software can pick up how it works for employers because this is going to micro-employers who have not in the past come into pension provision. They do not always have payroll software; it is not necessary if you have payroll of only three or four people. You can do it in the old-fashioned way with tables and so on.
	The Minister has told me that the Government are putting in a rather complicated scheme with automatic enrolment. It is at a level of complexity that I had not fully thought through until we started to go through this amendment. I said that it was a probing amendment and I shall withdraw it, but I want to reflect further on the kind of complexity that we are introducing and whether it is advisable. I certainly look forward to receiving the information that the Minister has promised to give to his noble friend Lady Hollis because I would like to share in that. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Skelmersdale: moved Amendment No. 42:
	Clause 12, page 6, line 40, leave out paragraph (a)

Lord Skelmersdale: I am afraid that this one is not a quickie.
	We now come to the other side of the earnings bands. I emphasise to avoid doubt that this is a probing amendment about the sort of earnings that will count as qualifying, which will be exempt, and the effect that the decision will have on existing employers' pension schemes of whatever sort.
	The issue is that in personal accounts a total contribution of 8 per cent of earnings between £5,035, in other words the LEL, and £33,500 must be paid, of which the employer must pay at least 3 per cent. We all know that. Earnings include additional benefits such as overtime, commission and bonuses. If an employer wants to continue to operate their own scheme, rather than enrol staff in personal accounts they much check each pay period, either monthly or weekly to ensure that the contribution made to their scheme is at least as great as that which would have been made to personal accounts.
	That is a problem because most private pension schemes currently use full basic earnings from £1 upwards rather than ignoring the first £5,035 and using a different sort of qualifying earnings.
	Those schemes rarely take into account bonuses, overtime and commission. This adds administrative complexity and additional costs for the employer. Each month the employer needs to check that both the total contribution and the employer contribution made are at least as great as would be made to a personal account. There are also communication problems and potential employer-employee tension. The employer needs to explain this change to employees and may ask employees to pay additional contributions in pay periods where commission and bonus is earned. This is exacerbated by the fact that bonus and commission are often not paid evenly over the year. Employees may have to pay variable contributions, which might influence their decision on whether to stay in the scheme or opt out.
	I believe that employers have three choices: accept the additional cost, complexity and communication problems caused by these changes; change their schemes to the same earnings definition as personal accounts; or close their schemes and enrol all employees in personal accounts. The Government—indeed, all of us—have made a point of trying to ensure that nothing in this Bill encourages employers to level down their schemes. The third point is therefore particularly important.
	How does this affect employees? Employees may need to pay higher contributions in pay periods when bonuses or commission are paid. Contributions could change month to month or week to week. As the first £5,035-worth of earnings are disregarded, employees who earn less than that amount in bonuses, commission and overtime will have less money paid into their pension funds. In addition, it is likely that employers will only have to pay the minimum contribution necessary and so employees may receive a lower employer payment. Employees who receive bonuses, commission or overtime of less than £5,035 are most at risk of losing out—in other words, low earners, the majority of whom are women.
	The question of whether bonuses, overtime et cetera should count towards qualifying earnings has a big impact in particular on money purchase schemes, and will be raised by my noble friend Lady Noakes later in her amendments to Clause 19. There are myriad perks that a jobholder can get from his employer that do not fall clearly into the definition given in the Bill. One obvious example is a car provided by the employer for his employee's use. Some employers give mileage payments for travel in the course of employment; others pay for all petrol used by their employee. I am sure that noble Lords can think of other perks, such as free plants from a nursery. This last example may be a little extreme, but noble Lords who know my background will see why I use it. The same point applies to any product made or sold by a firm and supplied to an employee for free.
	What advice will be given to employers to help them decide whether to count a payment? I am afraid that there is, as my noble friend Lady Noakes has just said, another complication. Earnings are calculated in different ways for income tax, where benefits of all kinds are counted, including those that I have just mentioned. However, in the calculation for national insurance, they are not. By using the lower earnings limit as the threshold for minimum earnings that qualify for auto-enrolment, do we not have a recipe for confusion? Subsection (3)(a) talks about what is included in the calculation: salary, wages, bonuses and overtime. As I pointed out at Second Reading, many existing employer pension schemes operate on the basis of any basic earnings, starting at £1. Do the Government really want these employers to restructure their schemes so dramatically before they are given approval as qualifying schemes?
	Over the weekend, Joanne Segars, the chief executive of the National Association of Pension Funds, said:
	"We support the Government's 2012 reforms but it is important that they do not add unnecessary costs to existing pension provision. All that is needed is a common sense change to the definition of Qualifying Earnings and we should see a good outcome for everyone. Ministers have underlined that they want the new Personal Accounts scheme to have a minimal impact on existing provision so we are hopeful that they will try to accommodate our concerns".
	I agree with her. That is why I tabled this amendment and why I have spoken rather more lengthily than I normally do. I beg to move.

Baroness Hollis of Heigham: I am in some difficulty here. I am not sure whether we should be debating the issue of basic versus qualifying earnings and what we see as an appropriate qualifying scheme in relation to this amendment or in relation to later amendments, including Amendment No. 60A. It is probably too late now but I would have found it hugely helpful if the amendments had been grouped because I think that we need to have a full discussion. We all agree that we want people to end up with the best-buy package, whatever that may be, but the question is: how do we provide a simple way of ensuring that they do so with as little alteration as possible to the existing structures of sound schemes, while ensuring that we do not build into the scheme a moral hazard whereby a few employers can pervert the notion of basic pay?
	If those are the contours of the debate, it seems to me that they are caught partly by this amendment, which is very interesting, and partly by the later amendments. Given that it is 10 minutes to 10, I am not sure what we do about that. Two companies, Scottish Widows and AEGON—I know the people there a little and respect them greatly—have told me that they are extremely worried about this issue. They feel that we are making problems here that we do not need to have. It may be that the Minister will wish to adduce arguments against that position, but at the moment I am disposed to believe that we have a real issue to address and I do not think that we can do it at 10 to 10—I have a feeling that it will be split between two sets of debates.
	I am not sure of the best way forward. Ideally, the later amendments would have been grouped with this one but I see that they are starred and therefore that was not the case. I do not know whether my noble friend can help on this or whether the noble Lord, Lord Skelmersdale, is able to withdraw the amendment and recast it in some way for next Monday so that we can pick up these issues. I think that we will have the same debate twice and I do not think that that will be very fruitful, particularly at this time of the evening.

Lord Oakeshott of Seagrove Bay: I have some sympathy with what the noble Baroness has said, although it is probably worth saying a few words about qualifying earnings. There is no particular reason not to discuss it now simply because we will be debating it both now and at our next Sitting.
	Perhaps I may set out briefly where we stand: "in some difficulty" is probably the best summary. We have had some pretty heavy-duty lobbying. I do not say that in any unkind way; we are very glad that lobbying groups on both sides have taken the trouble to meet us and talk to us as much as they have, and on that I am sure that I speak for other Members around the Committee. On the one side, we have heard from the massed ranks of the NAPF, the CBI and the ABI, and from individual companies such as Norwich Union, Standard Life, AEGON and the Society of Pension Consultants. All, understandably, have made the point that they want to avoid costly changes to existing scheme rules, which have worked quite well and are well established. On the other side, equally persuasively, there is support for the definition in the Bill from organisations such as the Pension Coalition, Which?, the TUC, Help the Aged, Age Concern and the Commission for Equality and Human Rights, which are obviously focusing much more on how it will work for the new people entering the scheme, and they worry that employees will miss out if the definition is changed.
	I feel that the right answer—I hope that we can work towards it—is to have a compromise, perhaps based around some sort of grandfathering of existing schemes but with safeguards. However, to be honest—and I believe that there is no harm in at least airing this now—I find myself quite torn.
	I listen and talk to one group and think that they have some very good points; then I listen and talk to the other. This should be work in progress for the Government and I hope that they will consider carefully the fact that there are some serious issues and that they will not just ignore or brush aside the serious points made by the people who run the existing schemes.

Lord McKenzie of Luton: I find myself in no difficulty, for once. This is genuinely work in progress for the Government. I hope that we will have a chance for a wider debate, but perhaps I may just deal with the script that I have.
	Clause 12 establishes both the qualifying earnings band and the range of reckonable pay components making up those earnings. Qualifying earnings underpin the calculation of contributions for money purchase pension arrangements and are also part of the criteria to determine whether a jobholder is to be automatically enrolled.
	Establishing a new minimum level of savings is vital if we are to realise our ambition of increasing pension savings, especially among moderate and low earners. Contributions need to be calculated at 8 per cent on a band of earnings as proposed by the Pensions Commission if they are to set a median earner with solid state entitlement on course to achieve an income in retirement of about 45 per cent of those median earnings. The commission proposed savings calculated on gross earnings. Reducing that drastically would affect the premise of the entire reform.
	We want to ensure that contributions are calculated on a wide definition of earnings. We are aware that about 65 per cent of those currently saving in defined contribution schemes have their contributions calculated on at least their basic pay. However, a narrower definition than planned would reduce the value of contributions, especially for workers with a low or no basic pay—especially people who work in, retail, telesales and, as my noble friend referred to earlier, parts of the motor industry, for whom commission payments are a significant proportion of overall income.
	Reducing pay components could mean fewer workers reaching the point at which qualifying earnings trigger automatic enrolment. It would also open up a possible loophole that could be used for avoidance by enabling employers to reclassify their workers' earnings, thereby reducing the level of contributions they are required to pay. I emphasise again that employers do not have to use those components. The requirement is to make contributions that would be equivalent or better than payments predicated on them. In addition, we do not want to include all earnings—for example emoluments such as non-cash benefits. We do not consider that appropriate for the purposes of pension saving.
	Following discussion with stakeholders, we are amending Clause 28 to help and we will continue to listen to options which do not reduce the integrity of the policy. I stress that our focus is on the amount of money going into the schemes, not the method of calculation, and we are not asking schemes to change their arrangements. As stakeholders have highlighted, that may cause difficulties for both employers and their schemes. We continue to listen to their concerns and will consider reasonable options about how the test may be applied. We have already proposed an amendment to Clause 28, as I said.
	Some stakeholders have suggested transitional protection or grandfathering for existing schemes. However, we do not consider that to be a sustainable solution, as it will become increasingly complex over time and may undermine the new minimum level of saving for some workers. I know that others have suggested that there should be an annual reconciliation.
	I end by quoting from a statement by my honourable friend the Minister for pensions, Mike O'Brien:
	"We must minimise any disruption to current pension arrangements, which is why the qualifying test must be designed in as simple a way as possible. I have listened to stakeholders and remain open to reasonable suggestions about how the test may be applied. We must strike a balance—maximising new savers and saving, and supporting existing pension arrangements—that's the key objective".
	I hope that, on that basis, the noble Lord will feel able to withdraw his amendment, but I am sure that we will have another go at this next week, when we meet again.

Lord Skelmersdale: I am extremely grateful to the Minister. I am sorry if I have caused difficulty for some Members of the Committee, but glad that the Minister had no difficulty. I was really getting at the Minister's answer to whether the Government are asking schemes to change their arrangements. I am glad to hear that the answer is no and that the Government intend to avoid this outcome.
	Clearly, the noble Baroness, Lady Hollis, is quite right. This has a relevance to our future discussion on qualifying schemes, but I was very careful almost to avoid mentioning them in moving this amendment. For both reasons, I am pleased that we had what the noble Lord, Lord Oakeshott, might call a pre-discussion. We have had this little debate and it will be extremely useful for our future consideration and other parts of Part 1. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 43 not moved.]
	Clause 12 agreed to.

Lord Tunnicliffe: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.
	House adjourned at 10.01 pm.